DTN Oil Update
Oil Futures Bearish During Trump's First Week in Office
HOUSTON (DTN) -- Oil futures closed bearish on Friday, marking the first week of losses in the past five weeks, amid high volatility caused by executive orders announced by President Donald Trump in his first week in office.
Trump's proposal to impose trade tariffs on imported goods from China, Canada and Mexico raised concerns about the potential consequences of these actions. Crude oil futures dropped below the $80 bbl mark recorded the previous week.
The possibility of the Trump administration imposing a 60% tariff on Chinese imports and of 25% for products manufactured in Mexico and Canada increased the uncertainty in the oil futures market as that could lead to higher prices and inflationary pressures on the U.S. economy.
Higher trade tariffs on imports of Mexican and Canadian crude oil, could also negatively impact refining margins for U.S. producers.
In the energy sector, the proposal to increase drilling activity in U.S. territories was expected to bring additional pressure on oil prices as a result of abundant supplies and weak global demand.
Oil futures prices plunged this week also after President Donald Trump urged Saudi Arabia and OPEC to release withheld oil production to reduce global oil prices, during his virtual appearance at the Davos World Economic Forum on Thursday, Jan. 23.
But on Thursday, the report of a fall on U.S. crude inventories last week, softened the steep fall seen in oil futures prices during the week.
Commercial crude oil inventories in the U.S. dropped by 1.0 million bbl to 411.7 million bbl in the week ended Jan. 17, the Energy Information Administration said in its Weekly Petroleum Status Report released Thursday.
Gasoline stocks climbed by 2.3 million bbl week-over-week to reach 245.9 million bbl on low seasonal buying interest, while distillate fuel stocks fell by 3.1 million bbl to 128.9 million bbl last week due to demand driven by severe cold weather affecting the U.S.
Refining utilization rates dropped to 85.9% last week, down from 91.7% the prior week, due to planned maintenance at refineries across the country.
The February NYMEX WTI futures contract edged up by $0.11 to $74.73 bbl, and the March ICE Brent futures contract edged rose by $0.28 to $78.57. The February RBOB futures contract fell by $0.0117 to $2.0670 gallon while the front-month ULSD futures contract rose by $0.0392 to $2.5107 gallon.
The U.S. Dollar Index dropped by 0.59 to 108.027 against a basket of foreign currencies.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com