Oil prices fell in early trade on Wednesday as markets were assessing the outcome of U.S.-China trade talks, yet to be reviewed by President Donald Trump, with weak oil demand from China and OPEC+ production increases weighing on the market.
Brent crude futures lost 24 cents, or 0.36%, to trade at $66.63 a barrel, while U.S. West Texas Intermediate crude fell 21 cents, or 0.32%, to $64.77 at 0119 GMT.
U.S. and Chinese officials agreed on a framework to put their trade truce back on track and resolve China’s export restrictions on rare earth minerals and magnets, U.S. Commerce Secretary Howard Lutnick said on Tuesday at the conclusion of two days of intense negotiations in London.
Trump will be briefed on the outcome before approving it, Lutnick added.
"In terms of what it means for crude oil, I think it removes some downside risks, particularly to the Chinese economy and steadies the ship for the U.S. economy – both of which should be supportive for crude oil demand and the price," said Tony Sycamore, a market analyst for IG.
Oil import data from China earlier this week and ongoing production increases from OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, were adding to the downside.
OPEC+ plans to increase oil production by 411,000 barrels per day for July as it looks to unwind production cuts for a fourth straight month.
Meanwhile, China’s customs data showed this week the country, the world’s biggest oil importer, brought in 46.60 million tonnes of crude oil in May, down 3% from the previous month, with imports of oil products falling by 12.9%.
Later on Wednesday, markets will be focusing on the weekly U.S. oil inventories report from the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
Analysts polled by Reuters expect U.S. crude oil stockpiles fell by 2 million barrels in the week to June 6, while distillate and gasoline inventories likely rose.
Their estimates are for a bigger decline in crude stocks than figures from American Petroleum Institute showed. The API reported on Tuesday that crude stocks fell by 370,000 barrels last week, sources said on condition of anonymity.
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