Oil futures flirted with positive territory Wednesday after the release of weekly US inventory data, but ended the session deep in the red, tracking equities lower as concerns mount over a possible trade war.
The resignation of Gary Cohn, top White House economic adviser and a free trade advocate, jolted financial markets late Tuesday.
Traders calculated that Cohn's departure had raised the odds President Donald Trump will follow through with his pledge last week to slap tariffs on imports of steel and aluminum.
White House press secretary Sarah Huckabee Sanders said Wednesday a decision on the tariffs was on track for this week.
Any slowdown in global economic growth as a result of less trade would likely hurt crude demand, a bearish scenario for oil prices.
US Energy Information Administration data released Wednesday that showed a smaller-than-expected build in crude stocks as well as declines in gasoline and distillate stocks briefly lifted the oil complex.
But with the Dow Jones Industrial Average hitting session lows Wednesday afternoon, oil futures fell.
NYMEX April crude settled down $1.45 at $61.15/b. ICE May Brent settled at $64.34/b, also down $1.45.
US crude inventories increased 2.408 million barrels last week to 425.906 million barrels, EIA data showed.
Analysts that S&P Global Platts surveyed Monday were looking for a build in crude stocks of 2.5 million barrels. Expectations shifted Tuesday evening when American Petroleum Institute data showed a build of 5.66 million barrels.
At Cushing, Oklahoma -- delivery point for the NYMEX crude contract -- stocks fell 605,000 barrels to 28.18 million barrels, the fewest since December 2014.
"This week's decline was the smallest that's occurred over the past 11 weeks, and a reversal to inventories building is expected to begin in the near term," said Jenna Delaney, senior oil analyst at S&P Global Platts Analytics.
US production increased 86,000 b/d last week to 10.369 million b/d, a record high, according to EIA weekly estimates that go back to 1983.
"Never, ever underestimate the US E&P companies. They are truly amazing," said Kyle Cooper, a consultant at ION Energy.
US gasoline stocks declined 788,000 barrels last week to 251.029 million barrels. Analysts were looking for a draw of 500,000 barrels.
On the Atlantic Coast, gasoline inventories plunged 3.388 million barrels to 61.8 million barrels, a 5.6% deficit to the five-year average. The region's refinery utilization dropped 6.2 percentage points to 79.1%.
The NYMEX RBOB crack against WTI was 41 cents higher at $19/b around the time of the NYMEX settle Wednesday afternoon.
Distillate stocks decreased 559,000 barrels last week to 137.426 million barrels, a surplus of 0.4% to the five-year average. Analysts were looking for a draw of 1.6 million barrels.
The NYMEX ULSD crack was up 25 cents Wednesday afternoon at $17.59/b.
