Oil up but set for weekly drop as tariff plan, US output weigh
Oil prices rose on Friday as Wall Street stocks bounced off session lows, but crude benchmarks were still poised for their first weekly fall in three weeks on fears US plans to impose tariffs on steel and aluminum could squeeze economic growth, and as US crude inventories climbed, according to Reuters.
On Thursday, oil followed the stock market lower after President Donald Trump said he would impose hefty tariffs to protect US producers. Investors feared the move would spark a trade war, with retaliation from major partners such as China, Europe and Canada.
The US oil and gas industry slammed the tariff plan, saying it would kill energy jobs by raising costs for big infrastructure projects.
Oil slid along with equities again early on Friday, but oil rebounded with US stocks as the S&P 500 index .SPX and the Nasdaq .IXIC moved into positive territory.
Brent crude LCOc1 rose 30 cents to $64.13 a barrel by 12:10 p.m. EST (1710 GMT). US crude CLc1 was up 16 cents at $61.15. Both contracts reversed direction after trading lower early in the session, but remained poised for weekly declines.
“Tariffs brought concerns that economic growth will be unable to boost demand,” said Gene McGillian, director of market research at Tradition Energy. Crude prices remained under pressure from concerns that US production may be high enough to offset output cuts from OPEC and Russia, he said.
On Wednesday, the government reported that US crude stocks USOILC=ECI rose faster than expected while gasoline inventories posted a surprisingly large increase.
“We are being driven by the pickup in US inventories and in general terms the market went a bit too far, too soon,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“Then we have the volatility in the US dollar and the implications of the tariff news to factor in,” he said.
The Organization of the Petroleum Exporting Countries meets for a dinner on Monday in Houston with US shale firms, the latest sign of the producer group widening talks about how best to tame a global oil glut.
US crude output slipped in the last month of 2017, but in November hit an all-time high of 10.057 million barrels per day. Weekly data showed another record and further gains are expected.
“The rise in total US commercial stocks coupled with a new high in domestic crude production made for a soft backdrop,” Stephen Brennock, analyst at London brokerage PVM Oil Associates, said in a note.