Oil prices rose as Wall Street stocks bounced off session lows, but benchmark crude futures posted their first weekly decline in three weeks on fears U.S. plans to impose tariffs on steel and aluminum could squeeze economic growth and jitters about rising U.S. crude production.
Oil followed the stock market lower after President Donald Trump said he would impose hefty tariffs to protect U.S. producers. Investors feared the move would spark a trade war.
The U.S. oil and gas industry slammed the tariff plan, saying it would kill energy jobs by raising costs for big infrastructure projects.
Oil slid along with equities again early, but oil rebounded with U.S. stocks as the S&P 500 index and the Nasdaq moved into positive territory.
Brent futures LCOc1 rose 54 cents, or 0.9 percent, to settle at $64.37 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 26 cents, or 0.4 percent, to settle at $61.25.
For the week, Brent was down about 4 percent and WTI down more than 3 percent.
The premium of the Brent front-month contract over WTI WTCLc1-LCOc1 briefly fell to its lowest since August before edging up by the market close.
“Tariffs brought concerns that economic growth will be unable to boost demand,” said Gene McGillian, director of market research at Tradition Energy. Crude prices remained under pressure from concerns that U.S. production may be high enough to offset output cuts from OPEC and Russia, he said.
The government reported that U.S. crude stocks rose faster than expected while gasoline inventories posted a surprisingly large increase.
“We are being driven by the pickup in U.S. inventories and in general terms the market went a bit too far, too soon,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.
“Then we have the volatility in the U.S. dollar and the implications of the tariff news to factor in,” he said.
The Organization of the Petroleum Exporting Countries meets for a dinner in Houston with U.S. shale firms, the latest sign of the producer group widening talks about how best to tame a global oil glut.
U.S. crude output slipped in the last month of 2017, but in November hit an all-time high of 10.057 million barrels per day. Weekly data showed another record and further gains are expected.