Oil Fluctuates as Trump Moves Shake Up Markets
Oil fluctuated as investors reacted to the Trump administration’s swift trade moves, with the U.S. threatening, and then delaying, a broad package of restrictions on Colombia.
Brent fell near $78 a barrel but pared deeper intraday losses, while West Texas Intermediate neared $74. Following the migrant row, President Donald Trump first ordered tariffs on Bogota, before the White House halted the action after Colombia agreed to all of Trump’s terms. Meanwhile, the U.S. dollar pushed higher, weighing on most commodities
Adding to the bearish pressure on crude were signs that China’s economic activity was faltering at the start of the year. Factory activity in the top oil importer shrank in January after three months of expansion.
Crude prices have remained high this year, after earlier U.S. sanctions on Russian oil and energy raised physical prices, prompting some refiners in Asia to seek alternative supplies. Traders are now adjusting to a changing mosaic of potential U.S. actions against trading partners as Trump begins his second term.
In addition to Colombia, the U.S. president has threatened action against China, Canada, Mexico and the European Union, while also urging OPEC to help lower prices. He argues that lower oil could starve Russia of revenues and help stop Vladimir Putin’s war in Ukraine.
“Trump’s action is important for the market because it shows that he is clearly credible in his aggressive use of tariffs,” said Chris Weston, head of research for Pepperstone Group. There is “increasing impetus” for Trump’s efforts to lower oil prices as trade restrictions come into greater focus, he said. Colombia — which has at one point ordered retaliatory sanctions — is the fourth-largest foreign source of oil for the U.S., surpassing countries such as Brazil, according to the Energy Information Administration. Recent data shows Colombia is shipping more than 215,000 barrels a day to U.S. ports.
Source: Bloomberg
