Oil prices fell on Wednesday, pulled down by weaker stock markets after a key advocate for free trade in the U.S. government resigned, stoking concerns Washington will go ahead with import tariffs and risk a trade war. Soaring U.S. crude oil production and rising inventories also dragged on crude prices, traders said.
Gary Cohn, economic adviser to U.S. President Donald Trump, seen as a bulwark against protectionist forces within the government, said on Tuesday he was resigning, triggering a more than 1 percent fall in S&P 500 futures in early Wednesday trade. Crude oil followed suit, with Brent futures down 51 cents, or 0.8 percent, from their previous close at $65.28 per barrel at 0414 GMT. U.S. West Texas Intermediate (WTI) crude futures were at $62.13 a barrel, down 47 cents, or 0.75 percent. “The overhang from the Cohn resignation … could see oil prices move lower during today’s session,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore.
A voice for Wall Street in the White House, Cohn’s move to resign came after he lost a fight over Trump’s plans for hefty steel and aluminum import tariffs.
Already, Asian equities declined with U.S. stock futures following the resignation of White House economic adviser Gary Cohn. The yen and Treasuries climbed as global trade-war concerns intensified. Stock indexes fluctuated before heading lower, while S&P 500 Index futures dropped over 1 percent. The yen climbed against the greenback and bond yields fell. The won rallied after North Korea indicated — according to South Korea — that it was open to giving up its nuclear weapons. The Australian dollar maintained a decline as economic growth data missed estimates. Shortly after the Cohn announcement, the White House said it’s considering clamping down on Chinese investments in the U.S. and imposing tariffs on a broad range of its imports. That comes as the administration prepares to impose steep tariffs on steel and aluminum, which Cohn had opposed. The prospect of increased protectionism overshadowed developments on North Korea that had underpinned gains in U.S. markets. Trump signaled that he’s open to talks with North Korea after Kim Jong UN’s regime told South Korean envoys that he’s willing to consider denuclearization.
