U.S. plan to sell oil reserves undermines OPEC supply management efforts

U.S. President Donald Trump's proposal to sell half of the United States' strategic oil reserve surprised energy markets on Tuesday since it counters OPEC's efforts to control supply in order to boost prices.

The White House requested in its budget released late on Monday gradually selling off the nation's Strategic Petroleum Reserve (SPR) starting in October 2018 to raise $16.5 billion. The U.S. SPR SPR-STK-T-EIA holds 688 million barrels, making it the world's largest reserve, and a release of half over 10 years averages about 95,000 barrels per day (bpd), or 1 percent of current U.S. output.

The plan came out just a day after Trump left Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), as part of his first overseas trip.

The U.S. has more leeway to release the SPR crude as its own production C-OUT-T-EIA has surged 49 percent over the past five years. But the move undermines OPEC's efforts to tighten global oil markets by cutting their output this year and likely into 2018.

The announcement pulled down front-month crude futures prices LCOc1 CLc1. However, the budget is not fixed since Congress has the final say and has rejected many White House proposals in the past.

Asia stocks, lifts yen

The dollar index, which tracks the greenback against a basket of trade-weighted peers, was flat at 96.97.

A gauge of U.S. economic activity that improved in April to its highest level since late 2014 helped limit the dollar's losses.

The White House is set to deliver Trump's first full budget to lawmakers later on Tuesday. The plan would cut $3.6 trillion in government spending over 10 years, balancing the budget by the end of the decade.

Presidential budgets are often ignored by Congress, which controls federal purse strings.

But the budget plan, which proposed the sale of half the country's strategic oil reserves, weighed on crude futures, offsetting optimism over expectations that other major oil producers would agree to extend supply curbs this week.

Global benchmark Brent retreated 0.8 percent to$53.44 a barrel.

U.S. crude futures gave up all their earlier gains to edge lower to $50.71, after hitting their highest level in more than a month earlier in the session.

The weaker dollar lifted gold slightly. Spot gold climbed 0.1 percent to $1,261.56 an ounce in its third straight session of gains.

The Dollar And Oil Price Dropped

The dollar dropped 0.7 percent to 112.37 yen, slipping further from its highs near 114.40 yen touched last week.

The dollar's index against a basket of six major currencies dropped to 97.93, giving up all of the gains made after Trump's election victory in November.

Other traditional safe-haven assets were also well bid. The Swiss franc gained 0.3 percent against the dollar to 0.9828 franc per dollar. The gold rose 0.6 percent to $1,243.4 per ounce.

The euro hit a six-month high of $1.1117, as it also drew support from solid economic data in the euro zone.

The euro zone's GDP grew 0.5 percent in January-March, in line with expectations, and underscoring a recovery in the currency bloc.

On the other hand, U.S. economic data published on Tuesday was mixed, raising more doubts about some rosy views on the economy.

While U.S. manufacturing production recorded its biggest increase in more than three years in April, housing starts posted a surprise fall to five-month lows.

The data came after Friday's softer-than-expected retail sales and inflation. The 10-year U.S. Treasuries yield dipped to 2.294 percent, flirting with its lowest level in two weeks.
 
Oil prices dropped after data showed an increase in U.S. crude inventories, stoking concerns that markets remain oversupplied despite efforts by top producers Saudi Arabia and Russia to extend output cuts.

Brent crude futures were at $51.28 per barrel, down 36 cents, or 0.7 percent, from their last close.

U.S. stock futures, dollar fall on rising concerns over Trump

U.S. share futures and the dollar tumbled on Wednesday on worries about more U.S. political turmoil after media reports said President Donald Trump asked then-FBI Director James Comey to end a probe into Trump's former national security advisor.

The reports raised questions over whether obstruction of justice charges could be laid against Trump, weakening confidence in the U.S. president's ability to push through an aggressive stimulus programme that investors had been banking on since his election in November.

S&P 500 mini futures, the world's most liquid stock futures, dropped 0.5 percent to 2,385, though they have managed to hold above their recent lows around 2,379.

European shares are expected to open lower, with spread-betters looking at declines of 0.6 percent for Germany's DAX, 0.4 percent in France's CAC and 0.2 percent for Britain's FTSE.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent while Japan's Nikkei shed 0.5 percent.

Trump asked Comey to end the FBI investigation into ties between former White House national security advisor Michael Flynn and Russia, according to a source who has seen a memo written by Comey.

The news, first reported by the New York Times, came after Trump had fired Comey and then discussed classified national security information about Islamic State with Russian Foreign Minister Sergei Lavrov.

The White House quickly denied the New York Times report, saying in a statement it was "not a truthful or accurate portrayal of the conversation between the president and Mr. Comey."

The tumult at the White House prompted currency traders to ditch the dollar against a broad range of currencies, most notably against the yen, to which investors often turn as a safe haven when there are problems in Europe and the United States.