Oil prices fell on Wednesday after industry data showed U.S. crude inventories unexpectedly rose last week, erasing some gains from the last session that were stoked after Washington said it would delay tariffs on some Chinese goods.
The move by U.S. President Donald Trump also sent commodities, stocks and other assets higher because of optimism the effects of the trade war, already being felt in economies across the world, will be blunted. Oil prices surged by as much as nearly 5 percent.
Consequently, Brent crude was down 35 cents, or 0.6 per cent at $60.95 a barrel after rising 4.7 per cent on Tuesday, the biggest percentage gain since December.
The U. S. oil was down 46 cents, or 0.8 per cent at $56.64 a barrel, having risen 4 per cent the previous session, the most in just over a month.
Markets had been pummelled in recent weeks amid tough talk from Trump on trade and they remain on tenterhooks due to the unpredictably of the U.S. president.
It is “becoming more difficult by the day to figure out what President Trump will do other than to say he will favour his own interests and then at times seem to work against them,” said Greg McKenna, strategist at McKenna Macro financial advisory company in Australia.
China’s commerce ministry said in a statement on Tuesday that U.S. and Chinese trade officials spoke on the phone and agreed to talk again within two weeks.
Data from industry group the American Petroleum Institute (API) showed U.S. crude stocks unexpectedly rose last week.
Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said.
Apart from signs that the U.S.-China trade tensions may be easing, analysts said prices were propped up by a belief that Saudi Arabia would stick with production cuts.
Saudi Arabia, the biggest producer among the Organization of the Petroleum Exporting Countries, OPEC, said last week it aims to keep its crude exports below 7 million barrels per day (bpd) in August and September to help siphon off global oil stocks.
The OPEC and its allies, known as OPEC+, agreed to cut 1.2 million bpd of production from the beginning of this year.