U.S. supply build, trade fears send oil prices lower

July 6 (UPI) -- Oil prices turned lower before the start of U.S. trading amid fears of the consequences of a global trade war and in response to a build in U.S. oil levels.

"It's finally here -- the trade war the Trump administration has threatened to launch against China," commentary published Friday by China's official Xinhua News Agency read. "But the trade victory the administration has promised its people is now more elusive than ever."

The Chinese government responded with reciprocal trade restrictions on U.S. goods after U.S. President Donald Trump enacted a 25 percent tariff on $34 billion worth of Chinese goods shortly after midnight EDT.

The threat of an all-out trade war could have sweeping implications on the global economy and undermine the demand for oil. The trade volley followed Thursday's report from the U.S. Energy Information Administration of a build in domestic inventories of 1.25 million barrels of oil, in contrast to expectations of a 4.5 million barrel drain.

"Prices are probably still suffering from the above expectation U.S. crude build yesterday," Giovanni Staunovo, a commodity analyst for UBS, said in response to questions emailed from UPI.

The price of Brent crude oil, the global benchmark for the price of oil, was down 1 percent as of 9:23 a.m. EDT to $76.61 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.8 percent to $72.36 per barrel.

The downturn came during a week when Trump complained to the Organization of Petroleum Exporting Countries that oil prices were too high. Geopolitical strains, trade tensions and production declines from OPEC members have all pushed and pulled against the price of oil in recent sessions.

A survey published Thursday from commodity pricing group S&P Global Platts found OPEC production increased 90,000 barrels per day from May to average 31.99 million barrels per day last month. OPEC producers in late June agreed to scale back an agreement to curb output to offset supply-side concerns. Platts reported Saudi Arabia oil production last month hit an 18-month high, but those gains were offsets by problems among other OPEC members.

In the U.S. economy, the Labor Department reported total non-farm payrolls increased 213,000 in June, better than expected. Hourly earnings for all employees increased 5 cents last month.