London —
Crude oil futures drifted downwards in European morning trading Thursday, giving back some of the previous day’s gains after a larger-than-expected crude stockdraw in the US had pushed both key benchmarks up by more than $2/b.

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At 1000 GMT, ICE October Brent crude futures were down 42 cents from Wednesday’s settle to $74.36/b, while the NYMEX October light sweet crude contract had lost 16 cents to $67.70/b.

The market was surprised by the 5.8 million barrel draw in US crude stocks reported by the EIA, which was well above the consensus 3.37 million barrel draw indicated by an S&P Global Platts poll of analysts earlier in the week.

“The commodities basket as a whole is soft this morning on the back of the trade talks between the US and China,” Geordie Wilkes, analyst at Sucden UK told S&P Global Platts Thursday.

Market participants were hopeful that the trade talks would result in a resolution this week but this is becoming increasingly unlikely, Wilkes added.

Looking specifically at the crude complex, Wilkes said that the moves this morning were mainly a reaction to the US-Chine trade talks, and doubts that a resolution will be reached this week in tandem with the implementation of Chinese tariffs.

China on Thursday implemented tariffs on a second tranche of US goods, targeting oil products and coal for the first time, in retaliation for US tariffs effective the same day and paving the way for crude oil and LNG to be hit next.

In other news, Saudi Arabian energy minister Khalid al-Falih denied a media report Thursday that the kingdom had canceled a planned initial public offering of state oil company Saudi Aramco.

“The Government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum,” Falih said in a statement carried by the official Saudi Press Agency.

This news, and the IPO as a whole, is “unlikely to have an impact [on the crude complex] until further details come out,” Wilkes said.

–Emma Kettley, emma.kettley@spglobal.com

–Edited by Alisdair Bowles, alisdair.bowles@spglobal.com

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