DTN Oil Update

Oil Futures Dropped on Trade Tariffs Uncertainty

HOUSTON (DTN) -- Oil futures traded lower on Wednesday morning amid concerns over trade tariffs and the potential impact of the proposal to increase drilling activity, as directed by the Trump administration, on oil prices.

The NYMEX WTI futures contract for February delivery fell by $0.11 to $75.72 bbl while the March ICE Brent futures contract dipped by $0.12 to $79.17 bbl. The February RBOB futures contract fell by $0.0168 to 2.0675 gallon and ULSD futures contract for February delivery fell by $0.0188 to $2.5393 gallon.

The U.S. Dollar Index rose by 0.7% to 108.040 against a basket of foreign currencies.

An executive order from President Donald Trump, seeking to review unfair trade practices by other countries, is targeting imported goods mainly from China, Mexico and Canada.

However, the timing of the implementation of these tariffs is still unclear. It is also uncertain how a hike on Mexican and Canadian crude oil prices derived from higher tariffs might affect U.S. refiners.

The proposal of the Trump administration to increase oil and gas drilling activity in the U.S. is expected to have a negative impact on oil prices as global oil demand remains sluggish.

Downstream, gasoline and diesel prices reported a hike last week driven by a surge of demand as severe weather conditions were reported across the U.S.

The national average for retail regular gasoline jumped 6.6cts to a 13-week high $3.109 gallon as of Monday, Jan. 20, 4.7cts more than the corresponding week in 2024, according to the latest data from the Energy Information Administration.

Meanwhile, the U.S. average on-highway diesel fuel price rose a fourth consecutive week, surging 11.3cts to $3.715 gallon as of Monday, the highest price since the week ended Aug. 5, 2024, the EIA said.

Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com