Crude futures extended losses in midweek on the back of rising US oil stockpiles and persistent worries about an early solution to the US-China trade war.

Sentiment had soured earlier in the week amid concerns about weak demand growth because of a slowing global economy and rising US inventories.

The market made an attempt at recovery on Tuesday after steep losses a day earlier but optimism soon dissipated as investors focused on the slow progress in resolving the trade dispute between the world’s two biggest economies.

Russia's Deputy Energy Minister Pavel Sorokin said it was too early to talk of deeper output cuts by Opec and its allies when they meet in Vienna in December, further depressing the price outlook.

The US and China were continuing to work on an interim trade agreement during the week but it may not be completed in time for leaders from both countries to sign it in Chile next month, a US administration official said.

Traders were also awaiting the outcome of the Federal Reserve’s two-day policy meeting. The Fed looked set later on Wednesday to use a third interest rate cut this year to try to stimulate a US economy hampered by slowing investment and weak growth overseas.

A rate cut would help to support oil prices because a stronger economy typically implies higher demand for crude.

The Energy Information Administration (EIA) said US crude inventories, excluding the Strategic Petroleum Reserve (SPR), rose by 5.7 million barrels in the week to 25 October.

Gasoline stocks fell by 3 million barrels, while distillates, which include diesel and heating oil, declined for a sixth week in a row, falling by 1 million barrels.

Brent futures were fetching around $60.85 per barrel in London in the middle of the week, compared with $60.30 at the same time last week.

US West Texas Intermediate crude was changing hands at around $54.76 per barrel in New York, an increase on last week’s $55.20.

“A strong rebound in Canadian imports and another SPR release has encouraged a build to crude inventories,” Matt Smith, director of commodity research at Clipper Data, was quoted by Reuters as saying.

“Tempering the bearish influence of the solid crude build are draws to both distillates and gasoline amid a tick higher in implied demand.”

The short-term price trajectory is now likely to be dictated by the US-China trade talks and the unfolding political drama in Iraq where the opposition has vowed to topple the government of Adel Abdul Mahdi.

Weekly

Prices stage mini-rally before sinking again