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London - Oil dropped for the first time in four sessions on a reported expansion in US crude inventories and the risk of an intensifying global trade war sparked by President Donald Trump.
Futures in New York fell as much as 1.3%. US stockpiles rose by about 5.7 million barrels last week, the American Petroleum Institute was said to report. Broader financial markets were also rattled after Gary Cohn said he’ll resign as economic adviser to the White House, while the Trump administration is said to be considering clamping down on Chinese investments in the US.
While crude has mostly stayed above $60 a barrel this year as OPEC and its allies continue to cut production to drain a global glut, investors worry that record US oil output could thwart the group’s efforts. Trump’s protectionist theme adds a new wave of concerns, with increasing signs of a trade war leading to turbulence in some risk assets.
“Oil fundamentals have been showing signs of weakening,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “Strong non-OPEC oil-production growth looks set to challenge OPEC and Russia’s ability to maintain price stability.”
West Texas Intermediate for April fell as much as 80 cents to $61.80 a barrel on the New York Mercantile Exchange and traded at $62.28 as of 8:21 a.m. local time. The contract rose 3c to $62.60 on Tuesday, the highest level in a week. Total volume traded on Wednesday was about 16% above the 100-day average.
Brent for May settlement declined 0.3% to $65.54 a barrel on the London-based ICE Futures Europe Exchange, after adding 0.4% on Tuesday. The global benchmark traded at a $3.38 premium to May WTI.
President Trump reiterated his commitment to imposing tariffs on steel and aluminum on Tuesday, saying “trade wars aren’t so bad.” Hours later, White House economic adviser Cohn, who had furiously lobbied against the tariffs, announced his resignation.
Shortly after Cohn’s announcement, Bloomberg News reported Trump may hit out at China, one of his primary targets on trade since his presidential campaign.
The administration is considering clamping down on Chinese investments in the US and imposing tariffs on a broad range of imports to punish Beijing for its alleged theft of intellectual property, according to people familiar with the matter.
Other oil-market news:
• Analysts surveyed by Bloomberg forecast a 3 million-barrel increase in US crude inventories.
• The government will release the weekly data later on Wednesday.
• The US Energy Information Administration boosted its estimates for global oil production, while lowering demand.
• The need for petroleum isn’t going away any time soon, Saudi Aramco CEO Amin Nasser said at the CERAWeek conference on on Tuesday.
• Chevron doubled its forecast for production from the Permian shale basin, adding to signs that US output growth will continue to upend global energy markets.
• Exxon Mobil wants to more than double earnings by 2025, helped by increased production in the Permian shale basin.
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