April 17 (UPI) — An expected build in U.S. crude oil levels gave support to comments from the IEA about the dangers of an overheated market to send oil prices lower Tuesday.
Crude oil prices rallied sharply for most of last week amid international saber-rattling over Syria. Western airstrikes on suspected chemical weapons targets during the weekend sparked concerns about a global escalation that would engage some of the world’s largest oil producers, though risk had eased from the market by Monday.
Crude oil prices are nevertheless holding at multi-year highs at around $70 per barrel for Brent, the global benchmark. Speaking Tuesday to Bloomberg News, Fatih Birol, the executive director at the International Energy Agency, said markets could overheat if the price gets too high.
“If prices increase significantly higher than what we have now, it may have some consequences which may not be desired by the established oil producers, such as weakening of global oil demand growth,” he said.
It could also stimulate production from Brazil and the United States, where output is countering an effort by the Organization of Petroleum Exporting Countries to balance an oversupplied market with coordinated cuts.
The price for Brent was down 0.5 percent as of 9:20 a.m. EDT to $71.06 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.62 percent to $65.81 per barrel.
Analysts surveyed Monday by commodity pricing group S&P Global Platts forecast a build in U.S. crude oil inventories of 625,000 barrels. That’s far below the historic average, though the estimate from Platts last week was overshadowed by official U.S. data showing a build of 3 million barrels.
Elsewhere, renewed trade tensions between the United States and China — the two biggest economies in the world — rekindled pessimism in the commodities market. China’s Commerce Ministry on Tuesday followed a U.S. block of American components for tech company ZTE with a swipe on U.S. grain.
“China has always opposed abuses of trade remedy measures,” Wang Hejun, the head of the ministry’s investigations, said through the official Xinhua News Agency. “China is willing to expand cooperation with the U.S. side to reduce disagreements in the trade field.”