At 11:25 am in Singapore (0325 GMT), ICE Brent October futures was down 57 cents/b (0.93%) from Tuesday's settle at $60.73/b, while the front-month NYMEX September light sweet crude futures contract was 66 cents/b (1.16%) lower at $56.44/b.Oil prices moved sharply higher Tuesday after the US Trade Representative's office announced that it was removing several products from the list of goods to be subjected with a 10% tariff with effect from September 1. The US trade office has also pushed back the start date for this latest round of tariffs to December 15, from September 1 as per initial announcements, after China's Ministry of Commerce announced on Tuesday that China and the US would resume trade talks in two weeks.
"The move viewed as at least hitting the pause button between the US-China trade fight was cheered by the markets," analysts from UOB Bank said in a note.
US President Donald Trump said on August 1 that the US would impose a 10% tariff on $300 billion worth of Chines goods on September 1, when trade talks between the two countries were scheduled to resume. While Trump had previously threatened to impose a 25% tariff, the move was still seen by the market as a serious escalation of trade tensions, and oil demand growth concerns have since weighed heavily on prices.
"In the twist and turns of US-China trade relations, we are once again going back to risk-on atmosphere midweek with President Donald Trump seen caving to certain extent on tariffs, though the sustainability remains to be seen," IG's market strategist Pan Jingyi said.
Meanwhile, a bearish report on US crude inventories later Tuesday had put a stop to the rise in international crude markers and overturned the more than $2/b overnight gain, analysts said.
According to analyst reports quoting data released by the American Petroleum Institute released Tuesday, US crude inventories were up 3.7 million barrels for the week ended August 9.
On Monday, analysts surveyed by S&P Global Platts were looking for US crude stocks to have declined by 2.7 million barrels for the same period.
"The API crude report is either a surprise or it is playing catch up," Price Futures Group's senior market analyst Phil Flynn said, adding that the API numbers look like they are fixing for a 3 million plus barrels drop in crude inventories over the past three weeks.
The API report was mixed on product inventories with US gasoline inventories up 3.7 million barrels and US distillate inventories down 1.3 million for the period ended August 9.
Market participants will be looking for definitive numbers on last week's US inventory data from the US Energy Information Administration due for release later Wednesday.
As of 0325 GMT, the US Dollar Index was down 0.09% at 97.605.
