DTN Oil Update
Oil Futures Rose, Despite Sluggish Demand and Strong USD
HOUSTON (DTN) -- Oil futures prices reversed their losses recorded this morning to settle higher on Friday, despite expectations that abundant supplies and weak demand will continue putting downward pressure on the two main crude benchmarks next year.
But a new statement from President-elect Trump warning that his administration will impose trade tariffs to European Union countries if they do not buy more U.S. oil and gas, changed the bearish sentiment Friday that dominated the market since Thursday.
"I told the European Unionâ?¯that they must make up their tremendous deficit with the United States by the large-scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!," Trump said in a post on his social media site Truth Social, The Guardian reported Friday.
The second term of the Trump administration is expected to further ignite the trade war between the U.S. and China by imposing more tariffs to the Asian country. Trump has also threatened to set 25% trade tariffs on all imports from its main trade partners, Mexico and Canada, starting next year as well.
However, those measures are expected to have a big impact on U.S. consumers and consequently on inflation, which the Federal Reserve confirmed this week that it will remain around a range of 4.25% to 4.50%.
Additionally, the perception that oil global demand willâ?¯remain sluggish next year has been reflected in the recent volatility of the crude markets as China keeps failing to boost its domestic consumption. â?¯
Crude prices this week were alsoâ?¯affected by a stronger dollar. Friday, the greenback rose 0.79% to 108.29 against a basket of foreign currencies, which include the euro, yen, Canadian dollar and Swiss franc, among others.
At 3:21 p.m. EST, NYMEX WTI futures contract for February delivery rose $0.17 to $69.85 bbl and the February Brent crude contract edged up $0.09 to $73.29.â?¯ January RBOB futures rose $0.0186 to $1.9414 gallon while ULSD futures for January delivery fell $0.0011 to $2.2366 gallon.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
