NEW YORK: Oil prices settled slightly lower on Wednesday, as a surprise draw in U.S. crude stockpiles triggered a rebound from session lows hit after China proposed a broad range of tariffs on U.S. exports that fed fears of a trade war.
Both Brent and U.S. crude slid to two-week lows after China, the world's largest importer of raw materials, hit back at the Trump administration's plan to levy tariffs on $50 billion of its goods, proposing duties on a broad range of U.S. imports.
Brent hit a session low of $66.69 and U.S. crude slumped as low as $62.06.
"I have high confidence that it will stagnate economic growth," said Michael McAllister, exploration and production equity analyst at MUFG in New York.
"It would be negative for pricing," he added.
But by the end of the session, Brent crude futures lost just 10 cents to settle at $68.02 a barrel, a 0.15 percent loss. U.S. West Texas Intermediate (WTI) crude futures fell 14 cents to settle at $63.37 a barrel, off 0.22 percent.
Prices pared losses after the Energy Information Administration released data showing U.S. crude inventories fell by 4.6 million barrels in the latest week. Analysts had expected an increase of 246,000 barrels.
The drop in inventories came as refinery crude runs rose by 141,000 barrels per day, EIA data showed. Refinery utilization rates rose by 0.7 percentage point.
Prices were also helped by a turnaround in the U.S. stock market. Oil prices have recently closely tracked equities.
"Supported by a 4.617 million barrel weekly crude oil draw across the U.S., a solid upturn in equities encouraged buyers in WTI," said Anthony Headrick, energy market analyst and commodity futures broker at CHS Hedging LLC in Inver Grove Heights, Minnesota.
"Yet, a 3.666 million barrel build at the Cushing, OK storage hub provided enough weight for a negative settlement."
A deal by OPEC and non-OPEC producers to get rid of excess supply has also supported prices. OPEC oil output fell in March to an 11-month low due to declining Angolan exports, Libyan outages and a further slide in Venezuelan output, a Reuters survey found, sending compliance with a supply-cutting deal to another record.