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Oil Futures Pare Early Gains, Settle Flat

Crude oil futures ended slightly lower on Friday amid speculation a shortage in supply due to OPEC-led output reduction could push up oil prices in the near term.

Discussions between the U.S. and Chinese officials ended today with the countries not reaching any agreement to end the trade tensions, but traders appeared to be betting on hopes a deal will happen sometime soon.

After the U.S. decided to increase tariffs from 10% to 25% on over $200 billion worth of Chinese goods and said it might levy new tariffs on more China imports, China responded by saying it would impose sanctions on U.S. products.

Still, crude oil prices managed to edge higher intraday on hopes tighter supply due to OPEC-led production cuts and the ongoing U.S. sanctions against Iran and Venezuela would push up energy prices in the near term.

West Texas Intermediate Crude oil futures for June ended lower by 4 cents at $61.66 a barrel, after rising to a high of $62.49 a barrel intraday.

Brent Crude oil futures for June edged up $0.30 to $70.69 by mid afternoon.

For the week, WTI oil futures shed about 0.5%.

According to a report from Baker Hughes, oil rig counts dropped for the third time in four weeks, with the number of oil rigs operated by U.S. energy firms going down this week.

The report said drillers cut two oil rigs in the week to May 10, bringing the total count down to 805, well short of 844 rigs a year ago. With several independent exploration and production companies deciding to focus on earnings growth instead of higher output, the rig count has been falling since the beginning of this year.

Recent data from the Energy Information Administration (EIA) showed crude inventories in the U.S. fell by 4 million barrels in the week to May 3.

The EIA report said gasoline stocks declined by 596,000 barrels in the week, while distillate inventories dropped by 159,000 barrels.

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