Oil prices dip ahead of US crude inventories

Oil prices dipped slightly on Tuesday, following the prior day’s surge, as the lull of news on the US-China trade front kept big moves in check and markets prepared for weekly data on US crude inventories.

New York-traded West Texas Intermediate crude futures dropped 9 cents, or 0.2%, to $56.05 a barrel by 6:52 AM ET (10:52 GMT), while Brent crude futures, the benchmark for oil prices outside the US, slipped 5 cents, or 0.1%, to $59.69.

Monday’s jump in oil prices was attributed to a positive reading of developments between Washington and Beijing as White House economic adviser Larry Kudlow outlined a timeline for further negotiations.

“The US-China trade spat has been at the center of the oil market demise, which has sent the global economy to the brink of recession and negatively impacted oil demand forecasts,” Stephen Innes, managing partner at VM Markets, said in a note. “This current (oil) rally is shaping up to be more about optimism on US-China trade than a heightened awareness of supply risks.”

Trade considerations aside, caution reigned ahead of weekly inventory data.

The American Petroleum Institute will release its weekly report on US crude stockpiles amid expectations for a draw of 1.89 million barrels.

“An unexpected rise could occur, possibly taking the wind out of oil’s sails, if only temporarily,” Jeffrey Halley, market strategist at Oanda, said.

Prices tumbled 3% after last week’s official data from the Energy Information Administration showed a surprise build.

In other energy trading, gasoline futures lost 0.2% to $1.6614 a gallon by 6:54 AM ET (10:54 GMT), while heating oil edged forward 0.2% to $1.8361 a gallon.

Lastly, natural gas futures traded down 0.5% to $2.199 per million British thermal unit.