DTN Oil Update

Oil Futures Fell Amid Trade Tariffs Concerns

HOUSTON (DTN) -- Oil futures settled lower on Tuesday as market participants continue assessing the impact trade tariffs on China, Mexico, Canada and other countries could have on the U.S. economy this year.

Among the different executive orders signed by U.S. President Donald Trump in his first day in office, oil traders are focusing on the review process that the Secretary of Commerce and the U.S. Trade Representative will be leading to detect "unfair trade practices by other countries". The deadline for this review will be April 1.

Separately, news reports indicated that the U.S. government will review the free-trade agreement with its main trade partners, Mexico and Canada, and is planning to impose a 25% tariff on imported goods from both countries.

The expectation of global trade tariffs to be imposed by the U.S. put pressure on the U.S. Dollar Index, which dropped by 1.34% to 108.625 against a basket of foreign currencies.

A bearish sentiment also dominated the oil futures markets in the day as the Trump administration proposes to increase oil and gas drilling activity in the U.S. as abundant supplies and sluggish global demand outlook will put downward pressure on oil prices.

The NYMEX WTI futures contract for February delivery fell by $1.99 to $75.89 bbl while the March ICE Brent futures contract edged down by $0.69 to $79.46 bbl. The February RBOB futures contract fell by $0.0234 to 2.0888 gallon and ULSD futures contract for February delivery fell by $0.0568 to $2.5642 gallon.

Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com