Oil holds near US$63 as crude stocks drop, trade tensions abate

WTI Crude Oil

Daily May WTI Crude Oil

WTI and Brent had hit two-week lows on Wednesday after China proposed a broad range of tariffs on U.S. exports, feeding fears of a trade war.

"Equities have been the most significant external driver for the short-term price direction of oil, with the significant volatility coming (partly) from the perception of a trade war", said Dominic Chirichella, senior partner at the Energy Management Institute in NY.

Crude oil futures fell sharply Friday along with United States stocks.

The price for Brent crude oil, the global benchmark for the price of oil, was up just 0.04 percent as of 9:16 a.m. EST to $68.05 per barrel.

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Futures in NY slipped as much as 2.1 percent to the lowest intraday price since March 20.

Over the past four weeks, motor gasoline product supplied averaged about 9.3 million barrels per day, up by 0.4 percent from the same period previous year.

U.S. West Texas Intermediate crude for May delivery was up 20 cents, or 0.3 percent, at $63.57 a barrel by 0646 GMT after settling down 14 cents.

Global equities sank after China unveiled its charges, which match the scale of proposed USA tariffs announced earlier this week and ratchets up tension in a brewing trade war between the world's two largest economies. That would be the biggest drop since January if confirmed by the Energy Information Administration's data on Wednesday.

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"We're seeing the reaction across the board. crude oil is keeping an eye on stocks and with S&P (futures) down. we're seeing renewed weakness ahead of the EIA this afternoon", Saxo Bank head of commodities strategy Ole Hansen said. Oil prices have recently closely tracked equities. The extent to which it counterbalance output cuts from the Organization of the Petroleum Exporting Countries (OPEC) will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford.

Before the rebound late on Wednesday, after the release of the Energy Information Administration (EIA) inventory data, WTI and Brent had hit two-week lows after China proposed a broad range of tariffs on US exports, feeding fears of a trade war.

Though this was largely thanks to the inexorable slide in Venezuela's oil production, figures are figures and the market is prone to take them at face value.

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