Crude oil futures were lower during mid-morning trade in Asia Tuesday amid concerns over the ongoing trade strife between the US and China, while market sources were looking ahead for the weekly US inventory report from the Energy Information Administration due later Wednesday.
According to media reports, ongoing trade negotiations between the US and China were facing some hurdles that could potentially push the trade deal into April or beyond.
"Signs of obstacles in the US-China trade talks seemed to dent sentiment in the market, with the US dollar reversing its previous weakness and crude oil subsequently selling off," ANZ analysts said in a note.
"Against the backdrop of heightened concerns over US-China trade and ahead of the Fed meeting, Asia markets may well trade cautiously once again," IG Market Strategist Pan Jingyi said.
While the Trump administration has delayed the deadline for new tariffs it had pledged to institute on March 1, delays in the trade negotiations would exacerbate the impact of current tariffs on both the US and Chinese economies.
Meanwhile, market participants would be looking out for last week's US crude and product inventory levels due for release from the EIA later Wednesday.
Analyst reports quoting data from the American Petroleum Institute released Tuesday noted that US crude stocks for the week ended March 15 were down 2.1 million barrels. Analysts surveyed Monday by S&P Global Platts were looking for US crude stocks to have increased by 1 million barrels for the same period.
"The market's attention now returns to the US, where investors are expecting a rise of about 1.5 million barrels in crude inventories when the EIA weekly report is released on Wednesday," ANZ analysts said.
Meanwhile, the chairman of Libya's state-owned National Oil Corporation, Mustafa Sanalla told Platts Tuesday that Libya's crude oil production has recovered to 1.2 million/d and has the ability to improve to 1.4 million b/d this year if the security situation remains stable.
Libyan oil output has recovered sharply over the past few years, with production having jumped to an over five-year high of around 1.2 million b/d late last year. But security and political challenges continued to impede the sector.
One of the biggest flashpoints has been at the country's largest oil field, Sharara. Sanalla said production at Sharara should near 300,000 b/d in the next few days, from current levels of 260,000 b/d.- Platts-