WTI reverses course following EIA-inspired spike, trades below $56.50

• EIA reports a decline of more than 10 million barrels in US oil stocks.
• China issues third batch of export quotas for refined oil products.
• Next round of US-China trade negotiations to kick off next week.

Crude oil prices gained traction during the early trading hours of the American session with the barrel of West Texas Intermediate jumping to its highest level in a week at $57.62 following the release of the weekly oil market report published by the US Energy Information Administration (EIA). However, the positive impact of the EIA data faded away and the WTI was last down 1.3% on the day at $56.40.

The EIA reported that crude oil inventories in the US declined by 10.8 million barrels in the week ending July 19 to surpass the market expectation for a fall of 4 million barrels.

Trade uncertainty hurts oil

Despite the data, however, the latest headlines surrounding the US-China trade conflict seems to be weighing on commodities.

Earlier today, China approved purchases of soybean from the US. On the other hand, US Treasury Secretary Mnuchin confirmed that he will be travelling to China with Trade Representative Lighthizer for the first round of face-to-face talks since the truce the sides had reached at the G20 summit but said that they were not expecting to reach a deal any time soon. "Expecting there to be a few more US-China meetings before reaching a final agreement on trade," Mnuchin told CNBC.

Meanwhile, citing three traders, Reuters earlier today reported that China has issued its third batch of export quotas for refined oil products for 2019 totalling 6 million tonnes. "The new batch raises the total export quotas for refined oil products to 48.2 million tonnes in 2019," Reuters said.

Technical levels to watch for