DTN Oil Update
Oil Prices Steady Amid Tariff Deadline Delay, OPEC+ Hike
VIENNA (DTN) -- Oil futures were little changed Tuesday morning, after gaining 1.5% in the previous trading session despite a larger-than-expected OPEC+ production hike plan. Market participants shifted their focus to U.S. trade policy as U.S. President Trump announced new tariff rates but postponed their implementation to Aug. 1.
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NYMEX-traded WTI for August was down $0.05 bbl to trade near $67.88 bbl, and ICE Brent for September delivery advanced $0.05 bbl to $69.63 bbl.
August RBOB gasoline futures rose $0.0173 to $2.1695 gallon, while the front-month ULSD futures contract fell $0.0031 to trade near $2.4180 gallon.
The U.S. Dollar Index gained 0.094 points to 97.235.
The 90-day tariff freeze, which was set to expire July 9, has been postponed to Aug. 1, at which point new, significantly higher import duties will be levied by the U.S. government. President Trump on Monday said that this new date was "not 100% firm," leaving market participants in the dark over new tariff rates and their timing.
Higher tariffs are set to curb oil demand growth at a time when OPEC plans to significantly ramp up production, elevating global oversupply concerns. By September, the 2.2 million bpd production cut shouldered by eight member states, in place since 2023, will be fully unwound -- at least on paper.
How much of these planned production hikes will be realized, and will they have a larger impact on oil prices than quotas which OPEC members have increasingly struggled to meet? Monday's lack of market reaction to the larger-than-expected output hike may come down to this very factor, namely to the growing gap between production targets and de facto output. According to OPEC's latest monthly oil market report, OPEC+ collectively produced 180,000 bpd more in May than in April, and production from the eight member countries who had agreed to raise output by a combined 411,000 bpd was up 153,000 bpd month-on-month. OPEC's next monthly report containing production figures for June is scheduled for July 15 release.