DTN Oil Update
Oil Futures Mixed on Reciprocal Tariffs Concerns
HOUSTON (DTN) -- â?¯Oil futures mixed on Thursday following U.S. President Donald Trump's announcement of reciprocal trade tariffs, which raised further concerns about the potential impact on the U.S. economy and additional inflationary pressures.
The front-month NYMEX WTI futures fell by $0.03 to $71.34 bbl while the April ICE Brent futures contract dropped by $0.08 to $75.10 bbl. March RBOB futures contract rose by $0.0229 to $2.11254 gallon while ULSD futures contract for March delivery fell by $0.0021 to $2.4541 gallon.
The U.S. Dollar Index dropped by 0.63% to 107.18 against a basket of foreign currencies.
President Trump signed a memorandum today calling for "fair and reciprocal" trade tariffs on all major U.S. trading partners, including longtime allies, according to a CNBC news report.
Trump has requested Commerce Secretary officials "to assess within 180 days on a country-by-country report whether 'remedies' that ensure reciprocal trade relations are necessary," the same report said.
The oil futures market reacted negatively to the announcement as higher-than-expected inflation in January has been attributed to the uncertainty generated by 10% trade tariffs the United States has imposed on imported goods from China and 25% on aluminum and steel imports from Canada and Mexico in recent weeks.
Thursday morning, the U.S. Bureau of Labor Statistics reported that the Producer Price Index (PPI) for final demand advanced 0.4% in January after seasonal adjustment. The figure was lower than in December when the index advanced 0.5% and above November's 0.2% gain. However, January's PPI was higher than the consensus estimates for a 0.3% increase.
The Bureau of Labor Statistics on Wednesday, Feb. 12, reported that the CPI rose 0.5% in January, bringing the annualized rate of inflation for the all-items index to 3.0%. January inflation was above the market expectation of 0.4%.
Additionally, the Department of Labor reported Thursday morning that the advance figure for seasonally adjusted initial claims was 213,000 for the week ending Feb. 8, a decrease of 7,000 from the 220,000 revised level from the previous week. The figure was below the market expectation of 220,000.
Expectations of interest rate cuts by the Federal Reserve in the short term were dismissed by Fed Chair James Powell during his testimony before the Senate Banking Committee on Feb. 11. "The economy is strong, the labor market is solid, and we have the luxury of being able to wait and let our restrictive policy work," Powell said.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
