March 13 (UPI) -- Crude oil prices drifted lower in early Tuesday trading amid warnings that emerging trade tensions could undermine an otherwise rosy economic outlook.
Crude oil prices slipped in Monday trading as expected gains in U.S. oil production overshadowed a slight drop in North American exploration and production activity reported last week. Prices moved higher in overnight trading, but moved into the red before the opening bell in New York.
Economists for the Organization for Economic Co-operation and Development said the global economy is projected to grow by 3.9 percent for both this year and 2019. Inflation, meanwhile, should rise slowly.
Broader markets stumbled last week after U.S. President Donald Trump announced new tariffs on steel and aluminum. The American Petroleum Institute, a trade group representing the interests of the U.S. oil and gas sector, said the tariffs could undermine U.S. energy growth just as the country is on pace to become the world's largest crude oil producer.
Trump's announcement last week sparked fears of a trade war, something the OECD said was an emerging risk factor.
"In this environment, an escalation of trade tensions would be damaging for growth and jobs," Pereira said.
Markets were jolted early Tuesday when Trump announced CIA Director Mike Pompeo was replacing Rex Tillerson as U.S. Secretary of State. The price for Brent crude oil was down 0.43 percent as of 9:16 a.m. EST to $64.67 per barrel. West Texas Intermediate, the global benchmark for the price of oil, was down 0.44 percent to $61.06 per barrel.
Traders and investors are looking ahead to data on supply and demand from the API and U.S. Energy Information Administration later this week. The Organization of Petroleum Exporting Countries is working to balance a market still tilted toward the supply-side with coordinated production cuts, though that effort is offset somewhat by U.S. output.
A survey of analysts from S&P Global Platts revealed expectations of a build in U.S. crude oil stocks of 2.5 million barrels last week, compared with an average of 3.8 million barrels for this time of year.
"If confirmed, that would nearly erase the surplus of current inventories to the five-year average, which stood at just 0.4 percent the week ended March 2," the emailed market report read.