Investing.com - Oil prices were down on Thursday in Asia after the latest comments by U.S. President Donald Trump dimmed hopes that the world’s two biggest economies could avert a resumption of their trade war.
U.S. Crude Oil WTI Futures and the international Brent Oil Futures both fell 0.9% to $61.59 and 69.80 respectively by 12:40 AM ET (04:40 GMT).
The fall in oil prices came after Trump said at a campaign rally in Florida overnight that China “broke the deal” he was negotiating with it on trade.
China's top trade negotiator, Vice Premier Liu He, is due to visit Washington later in the day and will likely try to prevent Washington from raising tariffs to 25% from 10% on $200 billion of Chinese imports.
Beijing has warned it will retaliate if the White House follows through on its plan to raise tariffs on Friday.
“It’s a very nervous market,” said Vandana Hari, founder of Vanda Insights, in a Bloomberg report. There is “heightened uncertainty” on several fronts including the trade deal, supply-demand and Iran, she said, adding that “the smallest of headlines could push prices in either direction, much more than they normally do.”
Meanwhile, the U.S. Energy Information Administration (EIA) said in its regular weekly report that crude oil inventories slumped by nearly 4 million barrels in the week to May 3, versus forecasts for a build of 1.2 million barrels. Crude stockpiles had risen by a net of nearly 30 million barrels in five earlier weeks, and oil bears had expected the trend to continue.
“The headline crude draw is definitely bullish, given the expectations for a continued rise after last week's humongous 10-million-barrel build,” Investing.com senior commodity analyst Barani Krishnan said following the report.
He noted that the slightly-larger-than-expected draw in gasoline inventories will also “put a little more octane in the bulls’ tanks” despite the fact that the draw on distillates was smaller than forecast.
“That the gasoline draw came on the back of higher product output is also noteworthy as refinery output is still below the 90% norm for this time of year”, Krishnan highlighted.
The EIA report failed to lift oil prices today as it was largely outweighed by Trump’s latest comments.