Tokyo/Seoul — Oil prices dropped 1% on Thursday amid concerns over the escalating trade battle between the US and China, despite a surprise fall in US crude stockpiles.
Brent crude oil futures were at $69.72 a barrel by 2.51am GMT, down 65 cents, or 0.9%, from their previous settlement. They earlier fell more than 1%.
US West Texas Intermediate (WTI) crude futures were at $61.52 per barrel, down 60 cents, or 1%, having also fallen more than 1% earlier.
“The inventory numbers from the US only gave oil a transitory boost. It is going to be all about whether the trade talks today can stop Friday’s tariff-geddon,” said Jeffrey Halley, senior market analyst at Oanda in Singapore.
The Sino-US trade war has weighed on oil prices this week as heightened tensions between the world’s two biggest economies cloud the global economic outlook.
US President Donald Trump said on Wednesday that China “broke the deal” in trade talks with Washington and would face stiff tariffs if no agreement is reached.
Higher tariffs are set to take effect on Friday, during Chinese vice premier Liu He’s two-day visit to Washington from Thursday.
“Enough progress made to make Mr Trump roll back his threats could see oil make back all of its recent loses in double-quick time,” said Halley. “A poor outcome will see the rot move deeper and oil’s recent fall continuing.”
Oil prices have had some support from signs of tighter global supply on the back of production cuts by the Organisation of the Petroleum Exporting Countries (Opec) and its allies, including Russia.
Both the Brent and WTI benchmarks have risen more than 30% so far in 2019.