Oil prices retreated on Thursday after gaining more than 2% in the previous session on bullish U.S. crude inventory data, as a fresh spat over Hong Kong fueled concerns of a further delay in any U.S.-China trade deal, Trend reports citing Reuters.
The trade war between the world’s two biggest economies has hit global growth prospects and dominated the outlook for future oil demand.
Trade experts have warned the first phase of a trade deal could slide into next year, while markets are wary negotiations might take a hit as the U.S. House of Representatives passed two bills to back protesters in Hong Kong, much to the disapproval of China.
Brent crude futures LCOc1 fell 20 cents, or 0.32%, to $62.20 a barrel by 0330 GMT. The international benchmark rose 2.5% on Wednesday.
West Texas Intermediate (WTI) crude futures CLc1 dropped 17 cents, or 0.3%, to $56.84 per barrel. U.S. crude closed up 3.4% in the previous session.
“Delays in signing the ‘phase one’ deal is yet another sign that Washington and Beijing remain poles apart when it comes to resolving their trade conflict,” said Abhishek Kumar, head of analytics at Interfax Energy in London.
“The Sino-U.S. trade war is already taking its toll on the world economy, which in turn will weigh on the growth in global oil demand.”
U.S. President Donald Trump said he is inclined to raise tariffs on Chinese imports if a trade deal is not reached.
A smaller-than-expected build in weekly U.S. inventories, however, propelled oil prices higher on Wednesday.
Crude stocks at the U.S. delivery hub of Cushing, Oklahoma fell by 2.3 million barrels, while U.S. crude stocks rose by 1.4 million barrels in the week to Nov. 15, compared with expectations for an increase of 1.5 million barrels, data from the Energy Information Administration showed.
“It was significantly lower than the 6 million barrels gain that API (American Petroleum Institute) data showed earlier in the week. However, it was a fall in stockpiles at the key pricing point of Cushing that drove prices higher,” ANZ Research said.
Russian President Vladimir Putin said on Wednesday Russia and OPEC have ‘a common goal’ of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.
The Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.