DTN Oil Update
Oil Futures Up, Uncertainty Over Tariffs Persist
HOUSTON (DTN) -- Oil futures settled higher on Monday, driven by the confirmation of retaliatory trade tariffs on Canada, Mexico and China from the United States, and after OPEC+ reiterated its plans to extent output cuts until the end of March.
The front-month NYMEX WTI futures contract rose by $0.38 at $72.91, below the $2 gain recorded earlier in the morning. April ICE Brent futures contract rose by $0.13 to $75.80 bbl. March RBOB futures contract rose by $0.0533 to $2.1118 gallon while, ULSD futures contract for March delivery advanced by $0.0633 to $2.4606 gallon.
The U.S. Dollar Index rose by 0.53% to 108.75 against a basket of foreign currencies.
Last Saturday, Feb. 1, the Trump administration implemented a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China on Saturday, claiming that those countries have failed to stop illegal immigration and drug trafficking into U.S. territory.
However, Monday, Trump and Mexico's president Claudia Sheinbaum announced that they reached an agreement to pause the tariffs for a month. The trade tariffs on imported goods from Canada will take effect Tuesday, Feb. 4.
Combined crude exports from Canada and Mexico reached approximately 4.5 million bpd in November, according to most recent data from the Energy Information Administration.
But amid the uncertainty generated by the tariff war led by the Trump administration, traders were focused Monday on the outcome of the first OPEC meeting of the year.
OPEC+'s Joint Ministerial Monitoring Committee reiterated Monday that the oil cartel's plans to extend voluntary oil output cuts of 2.2 million bpd, until the end of March 2025. The 2.2 million bpd adjustments are expected to be gradually phased out on a monthly basis until the end of September 2026.
OPEC+'s decision set a bullish tone in the oil futures market, despite it was in opposite direction from the Trump administration's demand for Saudi Arabia and the oil cartel to lower oil prices two weeks ago.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
