Oil prices pare losses as stockpiles fall way off

Oil prices tumbled on Wednesday after U.S. President Donald Trump threatened to levy new tariffs on China, and as Libya announced the reopening of key oil export terminals.

Prices recovered some of their losses after the U.S. Energy Information Administration (EIA) reported crude inventories south of the border fell by 12.6 million barrels in the week to July 6, compared with analysts' expectations for an decrease of 4.5 million barrels.

Brent crude fell more than $2.00 a barrel before recovering slightly to trade down $1.29, or 1.6%, to $77.57 U.S., mid-morning Wednesday.

U.S. light crude was down 51 cents at $73.60 a barrel.

The unveiling of tariffs on a further $200 billion U.S. of Chinese goods sent commodities lower along with stock markets, as tension between the world's biggest economies intensified.

Also on Wednesday, the Organization of the Petroleum Exporting Countries reported that its output increased in June, as the group's top producer pumped at its highest level since the end of 2016. OPEC agreed last month to start easing production caps put in place in 2017 to drain a prolonged crude glut and lift prices.

The American Petroleum Institute said U.S. crude inventories fell last week by 6.8 million barrels. Analysts had forecast on average that crude stocks fell by 4.5 million barrels, prior to the EIA release.