(Bloomberg) -- Oil dropped by the most in more than three weeks as equities declined and a U.S. government report showed an expansion of crude stockpiles and production.
Futures in New York slid 2.3 percent. Declines in the equity market, a rising dollar and concern that Trump’s tariff threats will spark a trade war acted as a downward force on crude oil. And at the same time, the Energy Information Administration reported American crude inventories rose by 2.41 million barrels last week, while production jumped to a fresh record.
There’s “concern that if the tariffs are imposed and we get into a trade war, it lowers overall global growth,” Craig Bethune, a senior portfolio manager at Manulife Asset Management, said by telephone.
The U.S. benchmark crude has closed above $62 a barrel earlier this week amid optimism at the CERAWeek by IHS Markit conference in Houston, where ministers and executives have been discussing the oil market. When asked whether the Organization of Petroleum Exporting Countries was worried about further U.S. crude output growth, OPEC Secretary General Mohammad Barkindo said he wasn’t and pointed to robust demand.
West Texas Intermediate crude for April delivery dropped $1.45 to settle at $61.15 a barrel on the New York Mercantile Exchange. Total volume traded was about 27 percent above the 100-day average.
Brent for May settlement fell $1.45 to settle at $64.34 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark traded at a $3.32 premium to May WTI.
The Bloomberg Dollar Spot Index rose as much as 0.2 percent.
The EIA report also showed gasoline supplies declined for the first time since January and distillate inventories fell for a fourth straight week. Stockpiles at the key U.S. storage hub in Cushing, Oklahoma tumbled for an 11th week to the lowest since 2014. Crude inventories rose by 2.41 million barrels, lower than expectations.
“The build was much less than the 5.66 million barrel build that the API had reported last night, which may have spooked the market a bit,” said Nick Holmes, an analyst at Tortoise in Leawood, Kansas, which manages $16 billion in energy-related assets. Yet, “there is a lot of uncertainty in the market with tariffs and NAFTA banter from D.C. The market doesn’t like uncertainty, especially things that could potentially crimp GDP growth and overall crude demand.”
Other oil-market news:
- Gasoline futures fell 1.2 percent to settle at $1.9103 a gallon.
- Exxon Mobil Corp., the world’s biggest publicly-traded oil producer, wants to more than double earnings by 2025, helped by increased production in the Permian shale basin.
- U.S. crude exports, including condensate derived wholly from natural gas, fell to average 1.34 million barrels a day in January from 1.51 million a day in December, according to Bloomberg calculations of U.S. Census Bureau data.
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