Crude retreats on trade concerns as dollar strengthens

[ad_1]

NEW YORK (Reuters) – Oil prices retreated on Friday after strengthening early in the session as U.S. President Donald Trump’s remarks on trade led the dollar to strengthen against other currencies, weakening greenback-denominated commodities including crude.

Trump told Canada and the European Union to do more to bring down their trade surpluses, a day after hitting the two U.S. allies and Mexico with import tariffs on their steel and aluminum.

The president’s comments led the dollar to strengthen and dollar-denominated commodities to sell off, said John Kilduff, a partner at Again Capital Management.

U.S. West Texas Intermediate crude fell 48 cents to $66.56 a barrel by 12:03 p.m. EDT. For the week, WTI was on track for a 1.9 percent fall, adding to last week’s near 5 percent decline.

Global benchmark Brent fell 91 cents to $76.65 per barrel. It was set to rise 0.3 percent for the week.

WTI’s discount to Brent widened to $11.57 a barrel, the largest since 2015, before narrowing to $10.19 a barrel as both grades retreated.

Concerns about growing U.S. crude production and a glut trapped inland due to a lack of pipeline capacity have pushed prices of WTI lower, doubling its discount to Brent over the course of a month,

U.S. crude production has hit record levels since late last year. In March, it jumped 215,000 barrels per day (bpd) to 10.47 million bpd, a new monthly record, the Energy Information Administration said on Thursday.

On a weekly basis, it rose to 10.8 million bpd last week, coming close to matching that of top producer Russia, the EIA also said on Thursday.

“There’s still the hangover from the report yesterday, the weekly number suggesting U.S. production is really strong and continuing to rip higher,” said Matt Smith, director of commodity research at ClipperData.

“Until transportation is incentivized to get crude to the coasts or production is shut in, “we’re going to continue to see some weakness in WTI,” Smith said.

The Baker Hughes’ U.S. drilling rig count, an indicator of future production, was due at 1 p.m.

Russia would be able to raise its oil output within months to levels last seen before a global production-cutting deal took effect if there is a decision to unwind the pact, a Russian Energy Ministry official said.

Sources told Reuters last week that Saudi Arabia, the effective leader of the Organization of the Petroleum Exporting Countries, and Russia were discussing boosting output by about 1 million bpd to compensate for losses in supply from Venezuela and to address concerns about the impact of U.S. sanctions on Iranian output.

This pushed Brent to a three-week low below $75 a barrel on Monday. Brent recovered some ground, however, when a Gulf source flagged that any rise in production would be gradual.

[ad_2]

You can read more of the news on source

Related posts