Oil Prices Edge Up Despite Tariff Concerns
Oil prices pared earlier losses to edge up on Tuesday, despite concerns over a potential U.S. recession, the impact of tariffs on global growth and as OPEC+ set its sights on increasing supply.
Brent crude futures edged up 18 cents, or 0.3%, to $69.46 a barrel by 0640 GMT after falling in early trade. U.S. West Texas Intermediate crude futures rose 9 cents, or 0.1%, to $66.12 a barrel after also falling earlier.
Despite the market noise, Brent around $70 a barrel is a strong support and oil prices may see a technical recovery at current levels, said Suvro Sarkar, head of the energy sector team at DBS Bank, adding that the OPEC+ supply response would continue to remain flexible depending on market conditions.
"If oil prices fall below $70 a barrel for an extended period of time, we think production increases will likely be paused. OPEC+ will also be watching Trump's policies on Iran and Venezuela closely," he said.
"The US has already revoked Chevron's (NYSE:CVX) license to operate in Venezuela and it remains to be seen whether sanctions on Iran will be tightened. However, in the meantime, concerns about global growth amid policy uncertainty and trade tensions will dominate."
US President Donald Trump's protectionist policies have rattled markets around the world. Over the weekend, Trump said a "transition period" for the economy was likely but declined to predict whether the US could face a recession amid stock market concerns about his tariffs.
"Trump's comments triggered a wave of selling as investors began to price in the risk of weaker demand growth," said Daniel Hynes, senior commodity strategist at ANZ.
Stocks, which often follow crude prices, slumped on Monday, with all three major US indexes falling sharply. The S&P 500 suffered its biggest one-day drop since Dec. 18 and the Nasdaq dropped 4.0%, its biggest one-day percentage drop since September 2022.
U.S. Commerce Secretary Howard Lutnick said Sunday that Trump would not ease pressure on tariffs on Mexico, Canada and China.
On the supply side, Russian Deputy Prime Minister Alexander Novak said Friday that the OPEC+ group agreed to start raising oil output in April but could reverse the decision later if market imbalances arise.
In the U.S., crude stockpiles are expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of the weekly report from industry group the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, at 10:30 a.m. EDT (1430 GMT) on Wednesday.rld, with Trump imposing and then delaying tariffs on his country's biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.
Source: Investing.com
