Oil’s sell-off is gaining momentum after the latest escalation in US-China trade tensions as well as data showing a smaller-than-expected weekly decline in US crude inventories.

Crude fell further into negative territory in early afternoon trading in New York, with West Texas Intermediate, the US standard, down 3.9 per cent to $66.49 a barrel. Brent, the international benchmark, was off 3.8 per cent to $71.81 a barrel.

Oil began the day on the back foot, and the sell-off gathered steam as China retaliated against the Trump administration’s latest tariff escalation by vowing to slap 25 per cent tariffs on $16bn of US goods including oil products, fuelling concerns about how fallout from the trade tiff between the two major economies will affect crude markets.

Wednesday morning also brought the latest update on US crude inventories, which fell less than analysts had expected last week.

If they hold, the declines would be the biggest one-day drop for both oil benchmarks in nearly a month, according to Thomson Reuters data.