On Thursday, oil followed the stock market lower after President Donald Trump said he would impose hefty tariffs to protect U.S. producers. Investors feared the move would spark a trade war, with retaliation from major partners such as China, Europe and Canada.
The U.S. 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 U.S. stocks as the S&P 500 index and the Nasdaq moved into positive territory.
“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 U.S. production may be high enough to offset output cuts from OPEC and Russia, he said.
Global benchmark Brent was up 45 cents at $64.28 at 2:29 p.m. ET after spending most of the session lower. The contract settled down 1.4 percent on Thursday at a two-week low and is set for a weekly fall of 4.5 percent.
U.S. West Texas Intermediate (WTI) crude ended Friday’s session up 26 cents at $61.25 after touching a two-week intraday low of $60.13.
U.S. crude posted a 3.6-percent drop this week, its first weekly decline in three, having given up much of the gains in recent weeks when sentiment was boosted by a fall in inventories at the Cushing delivery point for WTI.
On Wednesday, the government reported that U.S. crude stocks rose faster than expected while gasoline inventories posted a surprisingly large increase.
“We are being driven by the pickup in U.S. 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 U.S. 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 U.S. shale firms.
U.S. 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 number of oil rigs at work in U.S. fields rose by a single rig to a total of 800, according to the latest weekly report from Baker Hughes.
“The rise in total U.S. 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. Source: Reuters