An electronic display board shows Crude Oil Urals down. Urals oil is a reference oil brand used as a basis for pricing of the Russian export oil mixture. Picture: 123RF/PAVEL IGNATOV
An electronic display board shows Crude Oil Urals down. Urals oil is a reference oil brand used as a basis for pricing of the Russian export oil mixture. Picture: 123RF/PAVEL IGNATOV

London — Oil prices fell on Wednesday as worries over a possible delay in resolving the US-China trade war, which has hurt global oil demand, competed with a drop in US crude inventories, which buoyed prices.

Brent crude was up four US cents, or 0.06%, at $61.63 a barrel by 9.06am GMT. US West Texas Intermediate (WTI) crude was down 8c, or 0.14%, at $55.46 a barrel.

The US and China were continuing to work on an interim trade agreement, but it may not be completed in time for US and Chinese leaders to sign it in November, a US administration official said.

The latest potential setback in the negotiations stalled a rally in global share markets.

“Selling came courtesy of the fading optimism over trade and a Fed rate cut. Risk assets were dealt a blow as market players worried that the US and China would delay settling their trade differences,” said PVM analyst Stephen Brennock.

However, US crude inventories fell 708,000 barrels in the week ended October 25 to 436-million, compared with analysts' expectations for an increase of 494,000 barrels, according to data from industry group the American Petroleum Institute.

Investors are also awaiting the outcome of the Federal Reserve's two-day policy meeting this week. The Fed looks set later on Wednesday to nudge along a US economy that is being hampered by slowing investment and weak growth overseas. It would be the third cut in 2019.

A rate cut would help support oil prices as a stronger economy typically implies higher demand for crude, while falling inventories suggest the market is coming into balance.

Russia's deputy energy minister also said on Tuesday it was too early to talk of deeper output cuts by Opec and its allies, adding to the pressure on the market.

Opec and other producers including Russia — Opec+ — have cut oil output by 1.2-million barrels per day to support prices since January.

In the US, petrol stocks dropped 4.7-million barrels, compared with analyst expectations for a drop of 2.2-million barrels, and distillate stocks were down by 1.6-million barrels, vs an expected fall of 2.35-million barrels.

Still, crude stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.2-million barrels, the API said.

The Energy Information Agency (EIA) is set to issue its weekly report on Wednesday.

Reuters