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Oil Futures Settle Modestly Lower Despite Fall In Stockpiles

Crude oil futures settled modestly lower on Wednesday, with traders weighing official inventory data from U.S. Energy Information Administration and the Federal Reserve's policy statement.

West Texas Intermediate crude oil futures for July ended down $0.14, or about 0.3%, at $53.76 a barrel.

On Tuesday, West Texas Intermediate crude oil futures for July ended up $1.97, or 3.8%, at $53.90 a barrel, on mild optimism about a potential U.S.-China trade deal after U.S. President Donald Trump tweeted that he had a "very good" telephone conversation with Chinese President Xi Jinping.

Trump added that he will have an "extended meeting" with Xi at the G20 summit next week.

"Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting," Trump tweeted.

Data released by the U.S. Energy Information Administration this morning said crude stockpiles in the U.S. declined by about 3.1 million barrels last week, nearly three times up from analysts' forecast for a 1.1 million barrels drop.

Gasoline inventories were down unexpectedly by 1.69 million barrels last week. Markets had expected an increase of nearly 1 million barrels in gasoline inventories.

Meanwhile, distillates stockpiles were down 0.55 million barrels in the week, compared to forecasts for a build of 0.71 million.

On Tuesday, the American Petroleum Institute reported a modest weekly fall in U.S. crude stocks.

Traders now look ahead to the meeting of OPEC members and their allies, scheduled to be held in July. The participants are expected to decide on whether to extend output cuts.

Today, the U.S. Federal Reserve announced its widely expected decision to leave interest rates unchanged.

The accompanying statement said the Fed continues to see a sustained economic expansion, a strong labor market, and inflation near its 2% target as the most likely outcomes but noted uncertainties about this outlook have increased.

"In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion," the Fed said.

The line in the statement mirrors the pledge Powell made in a speech earlier this month, which helped spark expectations of a near-term interest rate cut.

Notably, the Fed also omitted its reference to remaining "patient" when determining future changes to interest rates.

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