CORRECTED-UPDATE 9-Oil strengthens in volatile trade ahead of expected U.S. crude drawdown

(Corrects to crude drawdown in headline, not build)
* U.S. crude stocks forecast 2 mln bbls lower last week -
poll
* Wall Street slips as financials fall, trade hopes flicker
* China says not heard of any telephone call from US on
trade
* COMING UP: API U.S. storage data at 4:30 p.m. EDT

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.
"We could have another one of these blockbuster (U.S. oil
inventory) drawdowns - that's supportive," said John Kilduff, a
partner at Again Capital Management in New York.
U.S. crude oil inventories were forecast to have fallen by
over 2 million barrels last week, a Reuters poll showed, ahead
of industry data at 4:30 p.m. EDT (2030 GMT) and the
government's report on Wednesday morning. EIA/S
The expected draw in inventories amid strong refining runs
is lending strength to crude prices, said Bob Yawger, director
of energy futures at Mizuho in New York.
During the session, the oil market 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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