Investing.com - Oil prices fell and gave up gains from earlier in the day as additional tariffs on Chinese goods kicked in, sparking worries about a collapse in U.S.-China trade negotiations.
U.S. Crude Oil WTI Futures were down 0.1% to $61.68 by 1:21 AM ET (05:21 GMT), while international Brent Oil Futures also slipped 0.1% to $70.38.
The additional tariffs kicked in at 12:01AM Washington time. Tariffs have now risen to 25% from the previous 10% on more than 5,700 different product categories from China.
China immediately said in a statement that it is “forced to retaliate”, but did not provide any further details.
Top U.S. and Chinese negotiators including Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin ended the first of two days of discussions in Washington and were expected to resume talks on Friday.
The talks have so far made little progress, with the mood around them downbeat, Bloomberg reported citing people familiar with the talks.
Oil drew some support earlier in the day on seemingly renewed hopes for a China-U.S. trade deal after U.S. President Donald Trump said he received a "beautiful letter" from Chinese President Xi Jinping.
Trump quoted the letter as saying: "Let's work together let's see if we can get something done."
In other news, Wednesday's data from the U.S. Energy Information Administration reporting a crude stockpile drop of 4 million barrels last week, projectiles fired from North Korea, ongoing fighting in Libya and threats by Iran to shut down two of the world’s most important waterways have all received some focus this week, but were largely overshadowed by trade-related news.
Ed Moya, Senior Market Analyst at OANDA, said the Iran situation could be a bullish catalyst for oil prices once trade tariff resolved. He also said a scenario of trade talks complete fell apart is “the least likely outcome” but U.S. equities could tumble 10% along with crude if it happens.