Oil End Mixed as Fear Over Tariffs Fade

NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures ended mixed Friday afternoon. West Texas Intermediate crude and RBOB contracts settled higher after shaking off early weakness, while ULSD futures eased. The May Brent crude contract on the Intercontinental Exchange advanced.

WTI futures reversed higher as technical support held, while there's growing sentiment that the two-day selloff was overdone. Also, some now say President Donald Trump's intention to impose stiff tariffs on imported steel and aluminum may not impact the U.S. economy as severely as some claimed after the initial news of the plan.

"We've seen WTI oil is technically holding above $60 bbl and the market had oversold," said analyst Phil Flynn at Price Futures. "People are starting to realize that tariffs won't be so bearish after all, and they may not have a big impact on the oil industry as people initially feared."

Under Trump's plan, details of which are expected to be unveiled next week, the United States would impose tariffs of 25% on imported steel and 10% on imported aluminum. Headlines from the Trump announcement drove U.S. markets sharply lower Thursday and the selloff continued early Friday before losses were pared in the afternoon, as analysts said the actual plan may not be bad for free trade as advertised.

On Wall Street, Dow Jones Industrial Average closed down 71 points while the S&P 500 Index and Nasdaq 100 closed slightly higher. The U.S. dollar was down after reversing off Thursday's six-week high, with the greenback having an inverse relationship with domestic oil prices.

Oil futures were also underpinned by the latest Baker Hughes report showing the number of active rigs drilling for oil in the United States increased by one for the second straight week this week to 800, although this was the sixth consecutive weekly gain. "The rigs report was not as bad as people expected and suggests production is leveling off," added Flynn.

Also, on Wednesday the Energy Information Administration reported total products supplied over the four-week period ended Feb. 23 rose 2.7% year-on-year to 20.4 million bpd, although total commercial petroleum inventories increased 3.7 million bbl last week.

NYMEX April West Texas Intermediate crude futures settled 26cts higher at $61.25 bbl, reversing from a $60.13 two-week low, and ended the week down $2.30 or 3.8%. Intercontinental Exchange May Brent crude futures gained 54cts to $64.37 bbl at settlement, with Brent down $2.71 or 4.0% on the spot chart from prior Friday.

NYMEX April ULSD futures settled down 0.59cts at $1.8796 gallon, off a $1.85 two-week spot low, with the spot contract down 8.98cts or 4.8% for the week. NYMEX April RBOB futures reversed up with a 0.50cts gain to settle at $1.9014 gallon. RBOB futures are 10.4cts or 5.8% higher than prior Friday on the spot continuous chart, reflecting season strength after Wednesday's expiration of the March contract.

George Orwel can be reached at george.orwel@dtn.com