Oil drops on doubts US-China trade deal will be signed soon, rising US stockpiles

US crude oil futures fell on Friday amid fading hopes that a deal to end the lingering trade war between Washington and Beijing would be signed any time soon, the gloom compounded by rising crude inventories in the United States.

US West Texas Intermediate (WTI) crude was down 15 cents, or 0.2 per cent, at $57 a barrel by 0032 GMT. The contract rose 1.4 per cent on Thursday. Brent crude, the global benchmark, was yet to trade after gaining 0.9 per cent in the previous session.

The trade war between the world's two biggest economies has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

On Thursday, the Chinese commerce ministry said the two countries have agreed in the past two weeks to cancel trade tariffs in different phases, without giving a timeline. However that comment was shrouded in doubt soon after when Reuters reported that the plan faces stiff internal opposition in the US administration.

Still, Brent is up almost 16 per cent in 2019, supported by a deal between the Organization of the Petroleum Exporting Countries and allies such as Russia to limit supplies until March next year. The producers meet on Dec. 5-6 in Vienna to review the policy.

Meanwhile there is “lingering concern about a rise in inventories in the US last week,” ANZ said in a note.

US crude oil stockpiles rose sharply last week as refineries cut output and exports dropped, while refined products extended a multi-week drawdown, the Energy Information Administration said on Wednesday.

Stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.7 million barrels, the EIA said.