Oil futures succumbed to heavy selling pressure midweek amid gloomy global economic data and an unexpected rise in weekly US crude inventories.

The plunge almost wiped out strong gains chalked up on Tuesday following a US decision to delay tariffs on Chinese products that encouraged markets by offering hope of easing a bruising trade dispute between the world's top economic powerhouses.

Futures tumbled more than 4% in New York on Wednesday on the back of weak economic data from China and Germany.

China is trying to cope with a slowing economy while the trade dispute with the US remains unresolved, clouding the outlook for future energy demand growth.

Industrial production in China, an important indicator for the country's economy, grew 4.8% in July compared to a year earlier, according to China's National Bureau of Statistics. That's the worst growth for that sector in 17 years.

“Oil is giving up most of Tuesday’s gain as it was reminded of economic realities with China’s industrial output falling to a 17-year low,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, was quoted as saying by Reuters.

He added the “price action goes to show just how focused and twitchy the oil market is on current and future economic conditions these days and far less so on supply-side developments”.

The global slowdown amplified by tariff conflicts and uncertainty over Brexit is also pressuring European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed.

The oil price weakness is being exacerbated by fears of a global recession, prompting investors to pile out of risky assets such as crude and other commodities and increase exposure to bonds.

Brent crude futures were changing hands at around $58.78 per barrel in late London trading midweek, down sharply from Tuesday's close but still higher than the $56.12 seen at the same time last week.

US West Texas Intermediate was fetching around $54.52 per barrel in New York trading, versus $50.63 around the same time last week.

The US Energy Information Administration (EIA) said crude stocks increased by 1.6 million barrels in the week to 9 August, compared with analysts’ expectations for a fall of 2.8 million barrels.

Oil stocks at the Cushing, Oklahoma, delivery hub fell by 2.5 million barrels.

Distillate stockpiles, which include diesel and heating oil, fell by 1.9 million barrels, versus expectations for a 1 million-barrel increase, the EIA data showed.

Saudi Arabia has indicated it will not stand idle while the oil market keeps losing momentum.

The country has been lowering its production as part of wider cuts by Opec and its allies such as Russia to prop up the market.

Nonetheless, persistent worries about weak oil demand have undermined Saudi efforts to achieve its preferred price of $70 a barrel.

Weekly

Price drop erodes gains made after tariff delay