WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved lower in early trading Thursday ahead of a key meeting between U.S. and Chinese trade delegations, while an unexpected drawdown in commercial crude supply in the United States limits losses.
At 9 a.m. ET, Nymex June West Texas Intermediate futures were $0.50 lower near $61.65 barrel (bbl), and ICE July Brent slid $0.35 to near $70 bbl. Nymex June RBOB futures were down 0.4 cents at $1.9710 gallon, and June ULSD futures were 1.5 cents lower near $2.0410 gallon.
Oil futures fell early Thursday alongside losses with U.S. equity futures, as trade tensions ramped up this week after U.S. President Donald J. Trump said that "China Broke the Deal."
White House threatened tariff retaliation this week amid reports Chinese negotiators walked back previous commitments. U.S. tariffs are set to increase to 25% on $325 billion worth of imported Chinese goods on Friday if a deal is not reached.
Ahead of talks scheduled to resume today in Washington, D.C., U.S. equities dropped to five-month lows in futures trading, with Dow Jones Industrial Average futures down 222 points and the S&P 500 Index dropped 0.9%.
Bloomberg reported Saudi Arabia received requests for oil purchases from countries that had to stop buying Iranian crude due to stiffening U.S. sanctions. The world's biggest oil exporter plans to meet all orders from ex-Iran buyers in June, while holding production below 10.311 million barrels per day (bpd).
Saudi Arabia pumped about 9.8 million bpd in March and April, well below the allowed quota under Organization of the Petroleum Exporting Countries agreement in a bid to drain excess oil from global inventories.
Energy Information Administration said on Wednesday U.S. commercial crude oil inventories declined by 4 million bbl to 466.6 million bbl, posting the first draw in three weeks. Government data showed domestic supplies came off the 19-month high level last week, while still posting a year-on-year 6.7% surplus. U.S. crude production fell 150,000 bpd to 12.2 million bpd during the week ended May 3, while U.S. crude oil imports dropped 721,000 bpd to 6.7 million bpd.
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