CORRECTED-UPDATE 10-Oil futures extend gains on larger-than-expected U.S. crude draw

(Corrects to inventories fell, not rose, in paragraph 3)
* U.S. crude stocks fall 11.1 mln bbls last week - API
* Wall Street slips as financials fall, trade hopes flicker
* China says not heard of any telephone call from US on
trade

By Jessica Resnick-Ault
NEW YORK, Aug 27 (Reuters) - Oil prices rose in volatile
trade on Tuesday supported by expectations of a drawdown in U.S.
crude inventories, though gains were capped by worries about a
recession and uncertainty over a China-U.S. trade deal.
Brent crude LCOc1 settled up 81 cents, or 1.4%, at $59.51
a barrel. U.S. West Texas Intermediate crude CLc1 ended $1.29,
or 2.4%, higher at $54.93 a barrel.
Prices extended gains in post-settlement trade, with Brent
touching a high of $59.88 and WTI hitting $55.45, after data
from the industry group the American Petroleum Institute showed
U.S. crude inventories fell more than expected. API/S
U.S. crude stockpiles fell sharply last week as imports
dropped, plummeting 11.1 million barrels, compared with
expectations for a 2-million barrel draw. The U.S. government's
weekly report is due to be released Wednesday morning. EIA/S
The draw in inventories amid strong refining runs is lending
strength to crude prices, overriding concerns that trade
tensions could weigh on demand, said Bob Yawger, director of
energy futures at Mizuho in New York.
During the session, the oil market had oscillated in
response to swings on Wall Street, which was hurt by a fall in
financial stocks, while revived worries about a U.S. recession
overshadowed early optimism of a resolution to the prolonged
trade dispute between the world's two largest economies. .N
U.S. President Donald Trump said on Monday that he believed
China was sincere about wanting to reach a deal, while Chinese
Vice Premier Liu He said China was willing to resolve the
dispute through "calm" negotiations. On Tuesday, however, concerns about trade resurfaced after
China's foreign ministry that it had not heard of any recent
telephone call between the United States and China on trade, and
said it hopes Washington can stop its wrong actions and create
conditions for talks.
Crude oil prices have fallen by about 20% from 2019 highs
reached in April, partly because of worries that the U.S.-China
trade war is hurting the global economy, which could dent demand
for oil.
China's Commerce Ministry last week said it would impose
additional tariffs of 5% or 10% on 5,078 products originating
from the United States, including crude oil, agricultural
products and small aircraft. In retaliation, Trump said he was ordering U.S. companies to
look at ways to close operations in China and make products in
the United States. "A relative sense of calm has been restored, but it is
simply impossible to know how long it will last," said oil
broker PVM's Tamas Varga.
"Any market optimism will only prevail when the ink has
dried on a new U.S.-China trade agreement".
The measures are prompting reactions from Chinese companies,
with Sinopec seeking a tariff exemption for importing U.S. oil
in the coming months, sources told Reuters. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC: U.S. crude inventories, weekly changes https://tmsnrt.rs/2y7mC9g
CHART: Brent oil may edge up to $59.42 L3N25N09S
CHART: U.S. oil may edge up into $54.28-$54.65 range before
falling L3N25N0U7
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