June 6 (UPI) — Crude oil prices drifted lower in early Wednesday trading amid signs of slumping U.S. consumer demand and lingering concerns about global trade disputes.
Benchmark indices for crude oil were mixed throughout much of the previous session after reports circulated that the United States was calling for more oil from the Organization of Petroleum Exporting Countries tacitly to protect against steady declines from Venezuela and possible declines from Iran.
OPEC is in its second year of an effort to erase a surplus in global crude oil inventories through coordinated production cuts. The market is near balance, so there’s little margin for shocks like an additional loss of oil.
The U.S. call for more oil comes despite its own record-setting production. Infrastructure constraints in the U.S. make it difficult for takeaway capacity to keep up with output.
Late Tuesday, the American Petroleum Institute reported domestic crude oil inventories nevertheless declined by 2 million barrels, though gasoline inventories swelled by almost 3.8 million barrels. The surplus in gasoline comes amid higher year-over-year consumer fuel prices and a long U.S. holiday weekend.
The U.S. Energy Information Administration publishes its data later in the trading day and Matthew Smith, the director of commodity research at ClipperData, told UPI he’s expecting confirmation of API crude oil drains, but traders are focused more on the possibility of new barrels on the market.
“The oil market appears to be discounting a bullish draw to crude stocks from the EIA report and the apparent accelerating demise of the Venezuelan oil industry, to focus on hopes of returning OPEC barrels instead,” he said.
The price for Brent crude oil, the global benchmark, was down 0.4 percent as of 9:24 a.m. EDT to $75.08 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.5 percent to $65.19 per barrel.
The price of oil has been under pressure given the potential for a trade war escalating over Washington’s pursuit of tariffs. Oil prices lost considerably ground in a U.S.-Chinese tit-for-tat on tariffs in April and now the focus is on Europe.
The European Commission announced Wednesday it endorsed a decision to impose duties on imported U.S. goods in response to U.S. President Donald Trump’s move on aluminum and steel tariffs. Europe can work to counteract the billions of dollars in good affected, according to rules established at the World Trade Organization.
“We regret that the United States left us with no other option than to safeguard EU interests,” European Trade Commissioner Cecilia Malmström said in a statement.