Oil prices give up gains; set for weekly drop

• Gains erased, declines extend a fourth day
• Asia extends Wall St selloff as Trump sparks trade war fears
• Prices on course to post first weekly losses in three 

REUTERS: US oil prices fell yesterday, taking declines to a fourth day as Asian share markets extended a sell-off on Wall Street after news of planned U.S. tariffs on steel and aluminium raised fears of a trade war. 

President Donald Trump announced he would impose hefty tariffs on the two metals to protect US producers, risking retaliation from major trade partners like China, Europe and neighbouring Canada.

Global benchmark Brent was down 2 cents at US $ 63.81 at 0740 GMT after spending most of the session slightly higher. The contract settled down 1.4 percent on Thursday, a two-week low. Brent is set for a weekly fall of 5.2 percent.

U.S. West Texas Intermediate (WTI) crude was down 11 cents, or 0.2 percent, at US $ 60.88 after also touching a two-week low of US $ 60.18 a day earlier.
US crude is on track for a 4.2 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.

“The market is not showing any obvious signs of turning around the mood. We are being driven by the pick-up 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. US crude stocks rose last week even as refineries hiked output, increasing by three million barrels, compared with expectations for an increase of 2.1 million barrels. Still, stocks fell again at Cushing in Oklahoma, with inventories down by 1.2 million barrels, the 10th consecutive week of declines, the Energy Information Administration said this week.

“Although destocking in Cushing has continued, with stocks there falling below 30 million barrels for the first time since late 2014, the overall increase in US oil stocks has overshadowed the good news,” Fawad Razaqzada, market analyst at Forex.com, said in a note. The Organisation of the Petroleum Exporting Countries (OPEC) will hold 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 (bpd). Weekly data showed another record and further gains are expected.