Oil deepens losses despite decline in US inventories

Oil drilling rigs

Oil prices deepened their losses today, May 7, despite a decline in US crude inventories and investors' anticipation of the start of US-China trade negotiations at the end of the week.

Brent crude futures for July delivery fell 1.66%, or $1.03, to settle at $61.12 a barrel. WTI crude futures for June delivery lost 1.73%, or $1.02, to $58.07 a barrel.

Data released today by the Energy Information Administration showed that US crude oil inventories fell by two million barrels last week, compared to expectations for a 1.3 million barrel decline.

This data points to the strength of energy demand in the world's largest economy, despite fears of a slide into recession due to President Donald Trump's trade war.

The US Federal Reserve warned of these risks in its monetary policy statement, saying that uncertainty about the future of the economy has increased, and the risks of worsening inflation and rising unemployment have increased.

Investors are awaiting a meeting between the US and Chinese trade ministers scheduled in Switzerland later this week, amid hopes that the world's two largest economies will reach a trade agreement to end their tit-for-tat tariff war.