2020.01.1509:00:00UTC+00Oil Prices Slip As Tariff Comments Dent Optimism

Oil prices slipped in cautious trade on Wednesday after a top U.S. official said tariffs on China would stay until a Phase 2 deal is completed.

Benchmark Brent crude dropped 0.4 percent to $64.22 per barrel. U.S. West Texas Intermediate crude futures were also down 0.4 percent at $57.99 a barrel.

The United States and China are expected to sign a 'Phase One' trade deal later today. The deal will lead to China buying more American agricultural goods, machinery especially aircraft and energy products, but does not tackle issues such as subsidies.

U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer said there was no agreement in place with China on further tariff reductions.

If the Chinese don't achieve the purchase price targets, the U.S. could impose new tariffs.

Adding to worries over U.S.-China trade relations, media reports suggest that the Trump administration is moving closer to a set of rules that would tighten sales of semiconductors to Chinese technology giant Huawei.

Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude supplies rose by 1.1 million barrels for the week ended Jan. 10, countering expectations for a draw.

Inventory data from the Energy Information Administration will be released later in the day.