NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled lower Thursday afternoon on Wednesday's bearish weekly U.S. crude oil supply data and pressure from a selloff by equities following President Donald Trump's threat to impose tough tariffs on imported steel and aluminum.
"Oil remains under pressure not only because of inventory data from yesterday, but also from the reaction of the equities market to the Trump announcement of tariffs because there's fear it will lead to lower economic growth, which will impact demand for oil," said Andy Lipow, president of Lipow Oil Associates in Houston.
On Wall Street, the Dow Jones Industrial Average plunged more than 580 points at one point Thursday afternoon before paring losses after Trump announced he intends to sign an executive order next week that would impose a 25% tariff for foreign-made steel and a 10% tariff on foreign-made aluminum. The broad-based S&P 500 Index was down more than 35 points.
The announcement sparked fears of a trade war with countries such as China, driving up prices of materials used for construction and oil drilling, which could boost inflation, said analyst Phil Flynn at Price Futures.
Oil futures were down even before the tariffs' announcement amid ongoing pressure from data released Wednesday by the Energy Information Administration that showed crude stocks rose 3.0 million bbl while gasoline supply climbed 2.5 million bbl during the week ended Feb. 23.
The EIA report also showed U.S. crude production increased by 13,000 bpd to a 10.283 million bpd fresh record high last week, undermining production cuts by the Organization of the Petroleum Exporting Countries and their 10 oil-producing partners. Bloomberg News reported OPEC production rose 130,000 bpd in February.
OPEC and 10 non-OPEC oil producers that include Russia aim to balance the market this year with their 1.8 million bpd in production cuts that were made effective in January 2017 and will run through the end of this year.
NYMEX April West Texas Intermediate crude futures settled 65cts lower at $60.99 bbl, off a $60.18 two-week low. Intercontinental Exchange May Brent crude futures were down 90cts at $63.83 bbl, off a $63.19 bbl two-week spot low. April ULSD futures settled down 1.8cts at $1.8855 gallon, after trading to a $1.8625 two-week spot low. NYMEX April RBOB futures declined 2.82cts to $1.8964 gallon, having gapped higher on the spot continuation chart following the expiration of the March contract Wednesday afternoon.
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