Oil prices fell on Thursday.  Benchmark Brent dropped below $64/barrel and US WTI settled the day at just over $60/barrel.  Anadarko photo.

Oil prices down over 1 per cent

On Thursday, oil prices fell and headed for a second-straight weekly drop due to a strong US dollar, rising crude stocks and higher US production as well as investors’ concerns over a possible trade war brought on by President Trump’s proposed steel and aluminum tariff.

Brent crude futures settled the day at $63.61/barrel, down 73 cents and US WTI futures fell $1.03 to finish the session at $60.32/barrel.  The Canadian Crude Index dropped to $37.85.

According to Reuters, Brent is on track to lose about 0.8 per cent this week, after a slide of 4.4 per cent last week.  WTI is set for a loss of 1.5 per cent, following last week’s drop of 3.6 per cent.

“It looks to me that crude has peaked and it’s heading lower,” Walter Zimmerman, chief technical analyst at United-ICAP told Reuters. “I see it heading back to test the early February lows, $57 for WTI and $62 for Brent. And I’m not at all confident that those levels are going to hold,” he said.

Oil prices were pressured by a 0.6 per cent increase in the US dollar against a basket of currencies.  The stronger US dollar makes oil more expensive for buyers using other currencies.

According to market intelligence firm Genscape, crude inventories at the Cushing, Oklahoma storage hub were up by over 290,000 barrels last week.  Should this be confirmed by official data, this would be the first build in Cushing’s stocks in 12 weeks.

Since November, crude stocks at Cushing have declined by half.

On Wednesday, the US Energy Information Administration reported US crude production hit a record high of nearly 10.4 million barrels per day (b/d).  As well, US crude production is expected to top 11 million b/d by late 2018, undermining OPEC’s efforts to cut the global crude glut.

Rob Haworth, senior investment strategist at US Bank Wealth Management says data from the EIA is “finally taking some of the wind out of the sails of the bullish speculators.”

Markets were on edge as President Trump signaled he would impose tariffs on imports of steel and aluminum.

“Until the U.S. tariff issue is better defined, we feel that odds favor a renewed sharp downturn in the stock market that will easily spill into the oil space,” Reuters reports Jim Ritterbusch, president of energy advisory firm Ritterbusch & Associates said in a note.

Thursday afternoon, Trump said Canada and Mexico would be excluded from the tariff, but the continuation of the decision hinges on NAFTA negotiations.

Along with crude oversupply, trade concerns and the rising US dollar, China reported a drop in oil imports last month.

Despite the decline, Goldman Sachs issued a revised 2018 global demand growth forecast of 1.85 million b/d, arguing a strong start to the year and a pattern of second-quarter demand growth.