Crude futures shifted lower in the European morning Wednesday 07.03.2018 as global market jitters rose on renewed fears of a trade war, while signs of rising inventories in the US offered a further headwind to crude prices.
European markets were falling Wednesday after US President Donald Trump's top economic advisor, Gary Cohn, said he would resign. That prompted concerns about whether Trump's plans to apply hefty tariffs to aluminum and steel can be halted, and raised expectations of further market volatility.
"It strengthens the case for a potential trade war," analyst at Sucden in London George Wilkes said. "We are not going there yet... but the market is slightly spooked."
As crude production in the North Sea continues to evolve, its role in an increasingly globalized market has started to shift, having an impact on Dated Brent and its position as a global oil benchmark. In this report, S&P Global Platts delves into the dynamics affecting the North Sea and Northwest Europe crude markets and the continuing evolution of Dated Brent.
The latest US inventory figures also put bearish pressure on crude, with the build exceeding analysts' expectations.
Weekly figures from the American Petroleum Institute, released on Tuesday, showed US crude inventories rose by 5.66 million barrels for the week ending March 2, the second consecutive week-on-week increase.
A survey of analysts conducted by S&P Global Platts expected stocks to rise by 2.5 million barrels last week.
The market will be watching to see whether the weekly US stock figures from the Energy Information Administration, which will be released later Wednesday, will bear out signs of rising inventories.
The market is also weighing forecasts that US production is becoming increasingly dominant.
On Tuesday, the EIA raised its estimate for US production growth by 1.4 million b/d, with production now expected to hit the 11 million b/d in October, from the earlier estimate of November.
"The US would already become the world's largest crude oil producer in the fourth quarter," Commerzbank analysts said in a note. That would only increase the pressure on OPEC to cut production further, they added.
--Katherine Dunn, firstname.lastname@example.org
--Edited by Jonathan Dart, email@example.com