March 14 (UPI) -- Oil prices were in positive territory in early Wednesday trading on the back of signs of diminished supplies, though economic concerns could spoil the rally.
Crude oil prices declined in a Tuesday session that started with a brief knee-jerk reaction to U.S. President Donald Trump's decision to fire his top diplomat, Rex Tillerson. The president has named CIA Director Mike Pompeo as the next secretary of state.
Tillerson was among those urging Trump to stick with a nuclear deal with Tehran that lets Iranian barrels flow in the global market. Pompeo will offer not such advice to a president who sees that agreement as flawed.
"Oil initially took this as bullish, but later feared what this uncertainty could do to the economy and potential demand," Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in market commentary emailed to UPI. "Yet, if the Iran deal gets dropped by the United States, it will be bullish for oil."
Oil prices recovered after the close of trading Tuesday when the American Petroleum Institute reported a build in U.S. crude oil inventories of 1.1 million barrels, but a 1.2 million drop in gasoline stocks. Data from economists at the Organization of Petroleum Exporting Countries said Wednesday that preliminary data for January show commercial crude oil stocks in the world's leading industrialized economies are only slightly above the five-year average.
OPEC is working to erase the surplus on the five-year average as a previous glut contributed to a historic slump in crude oil prices. The price for Brent crude oil was up 0.37 percent as of 9:19 a.m. EST to $64.88 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.61 percent to $61.08 per barrel.
Markets on Tuesday were pressured when Alvaro Pereira, the acting chief economist at the Organization for Economic Cooperation and Development, said global economic growth could falter if a trade war breaks out over President Trump's tariff policies.
Cecilia Malmström, the European Union's trade commissioner, said Trump's position that tariffs were a national security issue was met with broad skepticism.
"We are continuing the preparations to ensure that we can respond in line with the WTO rules," she said in a statement.
In its monthly market report for March, OPEC economists said the world's leading economy, the United States, is showing solid growth, but it is growth that comes with considerable questions.