DTN Oil Update
Oil Futures Down, Amid Tariffs Uncertainty
HOUSTON (DTN) -- Oil futures settled lower to end the week Friday as uncertainty prevailed about the impact of retaliatory trade tariffs from the U.S. on imports from Canada and Mexico, and how this could affect oil prices.
The front-month NYMEX WTI futures contract fell by $0.21 to $73.08 bbl, and the March ICE Brent futures contract was $76.76 bbl, down by $0.11. February RBOB futures contract edged down by $0.0009 to $2.0365 gallon while ULSD futures contract for February delivery gained $0.0091 to $2.4959 gallon, amid strong demand due to severe weather across the U.S.
Sluggish trading activity was reported on the day as traders awaited the implementation of 25% trade tariffs on imported goods from Canada and Mexico.
Canada and Mexico are the main crude suppliers for U.S. refiners, followed by Brazil, Colombia and Saudi Arabia, according to Energy Information Administration data. In November, the United States imported nearly 4 million bpd of Canadian crude and 453,000 bpd of Mexican grades, the most recent EIA data showed.
The expectation of higher tariffs on Canada and Mexico gave a boost to the U.S. Dollar Index compared to a basket of foreign currencies, as it climbed today by 0.55% to 108.19, its highest level in two weeks.
The oil futures market also awaits the first OPEC meeting of the year scheduled for Feb. 3.
During its December meeting, the oil cartel agreed to extend production cuts of 1.65 million bpd until the end of March, and 2 million bpd until December 2026.
However, that decision could change, after President Trump urged Saudi Arabia and the OPEC last week to lower global crude prices, claiming that this could help to end the war in Ukraine.
Meanwhile, U.S. economic data released today supported the expectation that the Federal Reserve will not cut interest rates in the short term.
The Bureau of Labor Statistics reported this morning that the Personal Consumption Expenditures index for December increased 0.3% above 0.1% reported in November. The PCE price index was in line with market expectations.
The core PCE index, which excludes volatile energy and food prices, was 0.2% in December, also in line with market consensus.
In earnings, Chevron's downstream business reported a loss of $348 million, down in the fourth quarter of 2024, compared to $146 million in the third quarter and $470 million year-over-year. The drop was attributed to lower margins on refined product sales and higher operating expenses.
Phillips 66's refining segment reported a loss of $775 million in the fourth quarter compared to a loss of $108 million in the third quarter due to a decline in realized margins, due in part to lower market crack spreads associated with the planned ceasing of operations at the Los Angeles refinery.
Exxon Mobil reported fourth quarter upstream earnings of $6.5 billion, up $340 million from the third quarter driven by record production in Guyana and Permian, stronger natural gas prices and favorable tax impacts.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com