SINGAPORE (Aug 16): Oil prices on Thursday recouped some of the previous day's losses after Beijing said it would send a delegation to Washington to try to resolve trade disputes between the United States and China that have roiled global markets.
Brent crude oil futures were at US$71.03 per barrel at 0455 GMT, up 27 cents, or 0.4%, from their last close.
US West Texas Intermediate (WTI) crude futures were up 5 cents at US$65.06 a barrel, held back somewhat by rising US crude production and storage levels.
Both benchmarks lost more than 2% during the previous day's trading.
Traders said Thursday's markets were pushed up by news that a Chinese delegation led by Vice Minister of Commerce Wang Shouwen will hold talks with US representatives led by Under Secretary of Treasury for International Affairs David Malpass later in August.
China and the United States have implemented several rounds of tit-for-tat tariffs on each others goods and threatened further tariffs on exports worth hundreds of billions of dollars.
Sentiment in oil markets was also cautious due to the rise in US crude production and storage levels as well as weakness in emerging market economies, especially in Asia, that could limit demand growth.
Output of US crude rose by 100,000 barrels per day (bpd) in the week ending Aug 10, to 10.9 million bpd, according to the US Energy Information Administration (EIA) weekly production and storage report.
At the same time, US crude inventory levels climbed by 6.8 million barrels, to 414.19 million barrels, the EIA said.
"This build certainly hasn't helped market sentiment," Dutch bank ING said after the release of the EIA report.
While supply rose in the United States, Asia's markets were showing signs of economic slowdown due to trade disputes with the United States and currency weakness, dragging on oil market sentiment.
"Oil prices continue to exude for bearish signals as investors worry on weaker global demand and rising production levels," Benjamin Lu of Singapore-based brokerage Phillip futures wrote in a note.
In Japan, official data on Thursday showed a slowdown in export growth as well as a decline in crude oil imports.
Asia's currencies also remained under pressure, with the dollar holding near 13-month peaks on Thursday as political turmoil in Turkey and concerns about China's economic health continued to support safe-haven assets.
Providing Brent crude with some support were looming US sanctions against Iran's oil exports, set to start from November, with Asian buyers including India, South Korea and Japan already scaling back orders in anticipation.
"The might of US sanctions has shown... as petroleum importers have reduced purchase orders from Tehran," Lu said.