By Jessica Resnick-Ault
NEW YORK (Reuters) - U.S. crude prices settled lower on Thursday as uncertainty about trade overtook bullish news about production cuts and U.S. monetary policy that drove prices higher early in the session.
U.S. President Donald Trump said on Thursday he would either strike a very big trade deal with China or "postpone" it, which sent oil traders scrambling to sell in the last day of trading for the March contract.
"There was a tendency to take profits if there was any sign of weakness, and President Trump's suggestion that a deal with China could be postponed triggered a move lower," said Phil Flynn, oil analyst at Price Futures Group in Chicago.
WTI crude fell 44 cents a barrel to settle at $53.79.
Brent crude futures for March delivery rose 24 cents to $61.89 a barrel.
Investors have been concerned about the outcome of the U.S.-China trade talks, which could shape the outlook for oil demand in the world's largest economies.
The two-day talks, which resumed in Washington on Wednesday, are aimed at easing a months-long tariff war between the world's top two economies.
"Market participants desperately need to see a tangible progress in the U.S.-China trade talks, which unfortunately is in short supply at present," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
There is little indication that Beijing will address core U.S. demands in the talks. If the two sides cannot reach a deal soon, Washington has threatened to more than double tariffs on Chinese goods on March 2.
The uncertainty overtook bullish sentiment driven by production cuts from the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia.
OPEC oil supply has fallen in January by the largest amount in two years, a Reuters survey found Thursday, as Saudi Arabia and its Gulf allies over-delivered on the group's supply-cutting pact while Iran, Libya and Venezuela registered involuntary declines.
OPEC and its allies announced supply cuts effective Jan. 1 to tighten the market after worries over a global glut caused heavy price losses in late 2018.
The Federal Reserve on Wednesday held interest rates steady, signalling its three-year drive to tighten monetary policy may be at an end amid the cloudy outlook for the U.S. economy.
The U.S. central bank discarded its promises of "further gradual increases" in interest rates, and said it would be "patient" before making any further moves.
U.S. sanctions imposed on state oil firm Petroleos de Venezuela SA (PDVSA) this week are also causing some supply disruptions. Inventories have started to build up at Venezuela's oil ports and terminals as PDVSA is finding it cannot export crude at its usual rate due to U.S. sanctions imposed this week.
(Reporting by Jessica Resnick-Ault in New York; Additional reporting by Noah Browning in London, Henning Gloystein in Singapore and Colin Packham in Sydney; Editing by Bernadette Baum and Sonya Hepinstall)
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