Oil Prices Drop as Trump Pledges to Boost US Production
By Shariq Khan
(Reuters) - Oil prices settled lower on Thursday after U.S. President Donald Trump repeated a pledge to raise U.S. oil production, unnerving traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.
Brent crude futures fell 32 cents, or 0.4%, to settle at $74.29 a barrel. U.S. West Texas Intermediate crude fell 42 cents, or 0.6%, to $70.61.
On Thursday, Trump repeated a pledge to boost U.S. production, already the highest in the world, in a bid to lower oil prices and ease consumer inflation.
Oil prices gave up early gains after Trump's comments. Still, analysts have questioned whether U.S. oil producers will be willing to pump more barrels in the current market.
"There is no indication of accelerating U.S. drilling activity," UBS analyst Giovanni Staunovo said, noting he was surprised by the market reaction to Trump's comments.
Oil prices were also under pressure from swelling U.S. crude inventories. Benchmarks fell 2% on Wednesday after U.S. government data showed domestic crude stockpiles rose by 8.7 million barrels last week, well above analysts' expectations of a 2 million-barrel increase. [EIA/S]
Macquarie analysts said they expect another large build in U.S. crude stocks this week.
TRADE SET TO REMAIN VOLATILE
Trading was volatile. Prices started the session higher after Saudi Arabia's state oil company sharply raised prices for buyers in Asia. Prices also drew support from new U.S. sanctions against individuals and entities for facilitating shipments of Iranian oil to China.
"The notice is out - if you're a refiner or shipper moving Iranian oil, any part of it, you're at risk of getting whacked by the Treasury," Flynn said.
In the near-term, oil markets are expected to remain choppy, with global trade pressured by Trump's rapidly changing decisions on tariffs and sanctions.
On Monday, Trump suspended his threat of steep tariffs on Mexico and Canada, but new duties on Chinese imports came into effect from Tuesday.
Trump reimposed a 'maximum pressure' campaign against Iran, yet also said he was open to a deal with Tehran.
"The only certainty is that comments from President Trump will continue to drive volatility in the oil market," UBS's Staunovo said.
Global benchmark Brent crude has tumbled over 8% since Trump took office on January 20, while WTI has dropped over 7%.
(Reporting by Shariq Khan; Additional reporting by Paul Carsten, Ahmad Ghaddar, Colleen Howe and Sudarshan Varadhan; Editing by David Goodman, Susan Fenton, Deepa Babington and David Gregorio)