DTN Oil Update
Oil Futures Dropped, Tracking Build in Crude Stocks
HOUSTON (DTN) -- Oil futures edged down Wednesday following American Petroleum Institute data showing a build in crude and gasoline inventories, while distillates stocks dropped last week.
The bearish tone in the oil futures market is driven by uncertainty about the impact of the actions taken by the Trump administration in recent weeks on global oil supply and demand.
The escalating trade war with China, Mexico and Canada that U.S. President Donald Trump has unleashed in recent days and his plan to put "maximum pressure" on Iranian crude trade put additional pressure on oil global prices and the U.S. dollar.
The front-month NYMEX WTI futures contract dropped by $0.83 to $71.87, and the April ICE Brent futures contract fell by 0.87% to $75.33 bbl. March RBOB futures contract fell by $0.0339 to $2.4036 gallon while ULSD futures contract for March delivery dropped by $0.0262 to $2.4036 gallon.
The U.S. Dollar Index fell by 0.44% to 107.39 against a basket of foreign currencies.
The American Petroleum Institute reported Tuesday, Feb. 4, commercial crude supply continued to build in the week ended Jan. 31. Meanwhile, gasoline inventory posted a build while distillate supply dropped.
Commercial crude oil supply increased 5.025 million bbl last week, the API reported. At the Cushing, Oklahoma tank farm, the delivery point for New York Mercantile Exchange WTI futures, stocks added 110,000 bbl.
Gasoline inventory posted a build of 5.426 million bbl in the week ended Jan. 31 and distillate fuel supply tumbled 6.979 million bbl.
Separately, the U.S. monthly international trade deficit increased to $98.4 billion in December, from the revised $78.9 billion reported in November, according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The hike was below the market expectation of $96.88 and was driven by an increase in imports while exports dropped.
The goods deficit increased by $18.9 billion in December to $123.0 billion. The services surplus decreased by $0.6 billion in December to $24.5 billion, according to the data.
The Trump administration aims to reduce U.S. trade deficit by imposing retaliatory tariffs on China, Canada and Mexico, but experts anticipate that this measure will have the opposite effect.
On Feb. 1, the United States imposed a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. However, even though the Trump administration announced a 30-day pause in the implementation of such tariffs over Canada and Mexico, both countries are expected to respond with reciprocity.
Meanwhile, China has imposed an additional 15% tariff on U.S. coal and LNG, and a 10% additional tariff on crude oil imports.
Maria Eugenia Garcia can be reached at Maria.Garcia@dtn.com
