DTN Oil Update
Oil Futures Fall Due to Tariff Deadline, OPEC+ Output Hike
HOUSTON (DTN) -- Crude oil futures reversed early gains on Thursday due to expectations of ample supplies and weak demand driven by an output increase from OPEC+ and the imposition of new punitive tariffs from the Trump administration on multiple countries starting Aug. 1.
The front-month NYMEX WTI futures contract dropped by $0.23 to $69.77 bbl, after reaching a $70.41 high earlier, while the September ICE Brent futures contract decreased by $0.38 to $72.86 bbl. The August RBOB futures contract fell by $0.0651 to $2.2440 gallon, while the ULSD futures contract for August delivery edged up by $0.0060 to $2.4245 gallon.
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The U.S. dollar rose by 0.214 points to 99.805 against a basket of foreign currencies.
After a 90-day pause announced in April, the United States is expected to impose additional tariffs ranging from 30% to 50% on several nations -- including India, Brazil and Canada, among others -- that have not reached a deal with the Trump administration.
The trade war is expected to affect global economic growth and to add inflationary pressure to the U.S. economy.
Separately, abundant oil supplies are expected to put downward pressure on oil prices, as OPEC + countries -- including Saudi Arabia, Iraq, Kuwait, Russia, the UAE, Algeria, Oman and Kazakhstan -- are scheduled to increase their crude output by 548,000 bpd starting Friday, Aug. 1, in addition to their 411, 000 bpd output increase set in July.
The bearish sentiment in the oil futures market this morning was also supported by a build in commercial crude oil and distillates inventories in the week ended July 25, according to most recent reports from the Energy Information Administration and the American Petroleum Institute. Crude oil inventories, excluding the Strategic Petroleum Reserve, increased by 7.7 million bbl to 426.7 million bbl last week, while distillate fuel stock also rose by 3.6 million bbl to 113.5 million bbl.
According to analysts, ample supply and weak demand fundamentals are expected to prevail despite additional sanctions recently imposed by the United States and the European Union, on Iranian and Russian oil trade.
On Wednesday, July 30, the United States Department of the Treasury imposed new sanction targeting 50 individuals and entities and more than 50 vessels that transports oil and petroleum products from Iran and Russia.
