Oil prices fell on Wednesday in Asia as uncertainty on the Sino-U.S. trade front intensified.
Citing people familiar with the matter, Bloomberg reported on Tuesday that U.S. officials are concerned that China might refuse to accept U.S. demands in the countries’ ongoing trade talks.
Meanwhile, Chinese negotiators want to receive more assurances that tariffs imposed on Chinese goods would be lifted once a deal is struck.
The report raised concerns that trade talks between the two sides might stall, and that outlook for global economic growth might be clouded as a result.
Oil prices received some support on Tuesday, with the May contract for Brent hitting a four-month peak at $68.2, after the American Petroleum Institute (API) reported a surprise draw in crude oil inventory of 2.133 million barrels for the week ending March 15.
Later on Wednesday, traders’ focus will likely shift to official figures from the U.S. Energy Information Administration (EIA) on U.S. crude stockpiles.
The EIA is expected to cite a U.S. crude stockpile build of 600,000 barrels for the week ended March 15, versus an unexpected draw of 3.9 million barrels in the week prior.
Oil prices have jumped about 30% this year, underpinned by aggressive production cuts carried out by the 14-member OPEC headed by Saudi Arabia and another 10 allies of the oil-producing club led by Russia.
Saudi Energy Minister Khalid al-Falih said on the weekend that he was optimistic about continued commitment to the oil supply cut agreement between OPEC and non-OPEC members, more commonly known as the OPEC+.
“I am obviously optimistic that implementation of our OPEC+ agreement will improve, it’s already strong by historical standards,” Khalid al-Falih said. He then added that cuts above the 1.2 million barrels per day originally agreed by OPEC+ will probably be needed.
Saudi Arabia has reportedly pledged bigger-than-needed cuts in its April shipments, while Russia also said it is planning to accelerate its progressive reductions.