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Oil prices drifted lower on Thursday as fears that the U.S.-China conflict could escalate overshadowed data showing an unexpected drop in U.S. crude inventories.

Benchmark Brent crude edged down 0.1 percent to $70.33 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 0.4 percent at $61.88 per barrel.

Trade war tensions continued to simmer after U.S. President Donald Trump threatened to impose additional tariffs on Chinese goods beginning on Friday, prompting Beijing to threaten retaliation.

After senior U.S. officials accused China of backtracking on its pledges in talks to end the trade war, China warned it would not "capitulate to any pressure".

As hopes for a trade resolution wane, China's vice premier and top trade official, Liu He, will arrive in Washington later today for two days of talks.

Heightened tensions between the world's two biggest economies risk derailing global growth and could hurt oil demand.

Meanwhile, according to the data released by the U.S. Energy Information Administration (EIA) on Wednesday, crude inventories in the U.S. fell by 4 million barrels in the week to May 3, much more than an expected increase of 1.2 million barrels.

Gasoline stocks declined by 596,000 barrels in the week, while distillate inventories dropped by 159,000 barrels.

The jump in inventories was due to a sharp decline in imports.