Oil Prices Rise As Markets Await Clarity On Trump's Tariffs On Canada, Mexico
Oil prices were little changed on Thursday as markets braced for U.S. President Donald Trump's threat of tariffs on Mexico and Canada, the two largest suppliers of crude to the United States, and awaited a meeting of OPEC+ producers.
Brent crude fell 7 cents, or 0.09%, to $76.51 a barrel by 0738 GMT. U.S. crude futures rose 2 cents, or 0.03%, to $72.64. U.S. crude futures closed at their lowest levels this year on Wednesday.
Trump still plans to follow through on his pledge to impose tariffs on Canada and Mexico on Saturday, White House spokeswoman Karoline Leavitt told reporters on Tuesday.
Trump's nominee to head the Commerce Department, Howard Lutnick, said on Wednesday that Canada and Mexico could avoid tariffs if they act quickly to close their borders to fentanyl, while pledging to slow China's advances in artificial intelligence.
IG market analyst Tony Sycamore does not expect a major impact on oil markets from Trump’s tariff pledge as traders have already priced in the possibility of the move: “(it) is the main reason why crude is trading where it is,” he said.
On the demand side, U.S. crude stocks rose by 3.46 million barrels last week, roughly in line with analysts’ forecasts for a 3.19 million-barrel increase, as a winter storm that hit the country last week hurt demand.
On the supply side, crude exports from Russia’s western ports in February were set to fall by 8% from January’s plan as Moscow ramped up refining, traders said and Reuters calculations showed, after fresh U.S. sanctions hit crude exports. Investors are also looking ahead to a ministerial meeting by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, scheduled for Feb. 3.
The OPEC+ group of leading oil producers will discuss Trump’s efforts to increase U.S. oil output and come to a common stance on the issue, Kazakhstan said on Wednesday. Russia is also a member of the OPEC+ group
Trump has publicly called on OPEC and its top member Saudi Arabia to lower oil prices, saying it would end the conflict in Ukraine. He has also set out an agenda to maximize U.S. oil and gas production, already the world’s largest.
However, analysts believe a price war between the U.S. and OPEC+ is unlikely because it would hurt both parties.
“A price war with the U.S. would involve OPEC+ producers maximizing their output to weaken prices and drive shale production down,” analysts at BMI, a division of Fitch Group, said in a note.
They expect Brent crude prices to fall below $50 as OPEC+ could use more than 5 million barrels of oil per day of spare capacity, driving U.S. shale production down as prices rise.
Source: Investing.com
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