Oil Prices Fall Over Rising American Inventories

Oil prices fell on Wednesday, pulled down by declining stock markets after a key advocate for free trade in the US government resigned, stoking concerns Washington will go ahead with import tariffs and risk a trade war.

According to CNBC, soaring US crude oil production and rising inventories also dragged on crude prices, traders said.

Gary Cohn, economic adviser to US President Donald Trump, seen as a bulwark against protectionist forces within the government, said on Tuesday he was resigning, triggering a more than 1% fall in S&P 500 futures on Wednesday.

Crude oil followed suit, with Brent futures down 53 cents, or 0.8%, from their previous close to $65.26 per barrel.

US West Texas Intermediate crude futures were at $62.14 a barrel, down 46 cents, or 0.7%.

“The overhang from the Cohn resignation ... could see oil prices move lower during today’s session,” said Stephen Innes, the head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.

A voice for Wall Street in the White House, Cohn’s move to resign came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs.

Major powers, including the European Union and China, have warned that such tariffs could lead to retaliatory action and trigger a global trade war, which could grind to a halt economic growth and, by extension, oil consumption.

Traders said oil prices were also weighed down by a reported rise in US crude oil inventories. Crude inventories rose by 5.66 million barrels last week to 426.88 million barrels, data from the American Petroleum Institute showed on Tuesday.

“Oil prices applied brakes as market optimism reclines on bearish API weekly petroleum reports,” brokerage Phillip Futures said in a note.

Official data by the US Energy Information Administration are due on Wednesday. Overall, oil supplies are ample despite efforts led by the Organization of Petroleum Exporting Countries and Russia to withhold output to prop up prices.

The EIA on Tuesday made its latest in a series of upward revisions for US crude oil production, which it now expects to rise by more than 120,000 barrels per day to 11.17 million bpd by the fourth quarter of 2018.

That would take the United States past Russia to become the world’s biggest oil producer. The US already passed top exporter Saudi Arabia late last year.