DTN Oil Update
Oil Futures Drop, US Dollar Strengths on Car Tariff Relief
HOUSTON (DTN) -- Oil futures dropped by over $1 for the second consecutive trading session on Tuesday, driven by expectations of abundant supplies from OPEC + countries and weak global demand, coupled with uncertainty caused by trade tariffs.
Starting in May, OPEC+ countries are scheduled to release 140,000 bpd, in addition to 2.2 million bpd output released on April 2. Additionally, negotiations between the United States and Iran over the Iranian nuclear program are seen as a possibility for lifting U.S. sanctions on Iranian oil trade, which could increase global oil supply and put pressure on oil futures.
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The front-month NYMEX WTI futures contract dropped by $1.28 to $60.77 bbl while the ICE Brent futures contract for June delivery fell by $1.40 to $64.46, respectively.
May RBOB gasoline futures contract was down by $0.0358 to $2.0700 gallon, while the front-month ULSD futures contract fell by $0.0340 to $2.1415 gallon.
This week, the two crude oil benchmarks have reached their lowest level so far in 2025 driven by weak global demand, particularly from China, the world's largest buyer of oil, due to the ongoing trade war with the United States.
The Trump administration has imposed a total 145% tariff on imported goods from China this year, while the Chinese government has levied 125% on U.S. imports.
Tuesday morning, the U.S. Dollar Index recovered from losses recorded in the previous trading session, increasing by 0.116 points to 98.905, as the Trump administration is expected to announce a tariff relief on car imports Tuesday. The U.S. imposed a 25% tariff on car imports in March.
"The greenback should continue to be tossed around by tariff developments (which have been USD-positive of late) and evidence of the damage already done to the US economy emerging from data. On balance, the risks are skewed to the downside for the dollar this week," said Francesco Pesole, FX strategist for ING Research.
The U.S. Dollar Index edged up by 0.116 points to 98.905, but it is still below the 104.96 average level recorded so far this year.
