By Shariq Khan
(Reuters) -Oil prices eased 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 36 cents, or 0.5%, to $74.25 a barrel by 2:11 p.m. ET (1911 GMT). U.S. West Texas Intermediate crude was down 44 cents, or 0.6%, at $70.59.
Trump on Thursday 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.
Even though prices gave up earlier gains on Trump’s comments, analysts have questioned U.S. oil producers’ willingness to pump more barrels in a market widely expected to be oversupplied this year.
“There is no indication of accelerating US drilling activity,” UBS analyst Giovanni Staunovo said, noting he was surprised by the market reaction.
Oil prices were also under pressure from rising U.S. crude stockpiles. 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 on Thursday said they expect another large build in U.S. crude stocks this week.
TRADE SET TO REMAIN VOLATILE
Trading action was volatile on Thursday, and prices had started the session higher after Saudi Arabia’s state oil company sharply raised prices for buyers in Asia.
Oil prices also found 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 continue to be choppy as well-established global trade routes come under pressure from 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.
Meanwhile, even as he reimposed a ‘maximum pressure’ campaign against Iran, he 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 KhanAdditional reporting by Paul Carsten, Ahmad Ghaddar, Colleen Howe and Sudarshan VaradhanEditing by David Goodman, Susan Fenton and Deepa Babington)
