DTN Oil Update
Oil Futures Fall on Trump's Tariffs Plans
HOUSTON (DTN) -- The NYMEX WTI and ICE Brent futures contracts for February delivery settled lower on Wednesday on media reports that the incoming administration of President-elect Donald Trump might be declaring a national economic emergency plan to impose global trade tariffs.
"The declaration would allow Trump to construct a new tariff program by using the International Economic Emergency Powers Act, known as IEEPA, which unilaterally authorizes a president to manage imports during a national emergency," according to a CNN report citing four sources familiar with the matter.
Trump is scheduled to be sworn in for a second term on Jan. 20 and his administration is expected to impose 60% trade tariff on China, 25% on Mexico and Canada, U.S.'s main trade partners. Trump recently threatened to impose punitive tariffs on EU countries if they don't buy U.S. crude.
Oil futures markets closed the day down after reversing gains recorded this morning, despite the Energy Information Administration reporting a drop on U.S. crude inventories last week. The two main crude benchmarks retreated from the bullish sentiment that helped them to hit a three-month high in the first trading sessions of the year. In the opposite direction, the U.S. Dollar Index climbed against a basket of foreign currencies as it rose by 0.53% to 109.205, on expectations that trade tariffs could favor a stronger U.S. dollar.
The EIA said commercial crude oil inventories in the U.S. fell by 1 million barrels (bbl) to 414.6 million bbl in the week ended Jan. 3. However, this figure was lower than the 4.022 million bbl crude oil reported by the American Petroleum Institute on Tuesday, Jan. 7, for the same reference week.
U.S. crude inventories are about 6% below the five-year average for this time of the year, according to the EIA.
Gasoline stocks rose 6.3 million bbl week-over-week to reach 237.7 million bbl, while distillate fuel stocks rose 6.1 million bbl to 128.9 million bbl last week, the EIA said.
The NYMEX WTI futures contract for February delivery fell by $0.82 to $74.43 bbl and the February ICE Brent futures contract edged down by $0.77 to $76.28 bbl. The front-month RBOB futures contract fell by $0.0120 to $2.0146 gallon while the ULSD futures contract for February shipments dropped by $0.0093 to $2.3570 gallon.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
