Mubasher: Oil prices fell on Friday as worries about a global economic slowdown persisted, despite bitter trade tensions between Washington and Beijing showed signs de-escalation, Reuters reported.

By 11:17 am GMT, US Nymex crude futures fell by 2.08% to $55.13 per barrel (pb), while global benchmark Brent futures dropped by 2.21% to $59.60 pb.

Nymex is on track to post its second weekly gain, as Brent poised for a fourth weekly rise.

Crude oil inventories in the US dropped by 4.8 million barrels last week to 423 million barrels, the lowest level recorded since October last year, the Energy Information Administration (EIA) said in its weekly report.

In response to the report, oil futures surged by more than 2%.

The US and China on Thursday agreed to hold high-level trade talks next October in Washington, raising hopes of a thaw in a protracted bitter conflict that has roiled financial markets.

Nevertheless, traders seemed to be not totally convinced that the bilateral talks would lead to any progress.

“There is still no getting away from lingering demand-side concerns,” oil broker PVM analyst Stephen Brennock was quoted by Reuters.

The tit-for-tat tariff war between the world’s two biggest economies has taken a heavy toll on global economic growth, and thereby dented oil demand.

Adding to signs of an incoming global economic slowdown, Germany’s industrial output dropped last July, sending Europe’s largest economy on track to a recession in the third quarter.

“If trade tensions escalate further, oil demand growth may soften even more, requiring much lower prices,” a note by UBS oil analyst Giovanni Staunovo was quoted by the news agency.