DTN Oil Update
Oil Futures Drop on Trade Tariffs Concerns
HOUSTON (DTN) -- Oil futures settled lower to close the week on Friday following U.S. President Donald Trump's confirmation that his government will impose additional trade tariffs on imported goods from China, Canada and Mexico starting next week.
The announcement has added uncertainty regarding the negative effect these actions could have on the U.S. economy by increasing inflationary pressure. Trade tariffs have set a bearish tone in the oil futures markets since Trump took office on Jan. 20, keeping the NYMEX WTI futures contract below the $70 mark.
The NYMEX WTI and ICE Brent futures contract for April delivery fell by $0.57 to $69.78 bbl while the front-month ICE Brent dropped by $0.86 at $73.18 bbl. The ULSD futures contract for March delivery fell by $0.0410 to $2.3549 gallon while March RBOB futures contract edged down by $0.0263 to $1.9703 gallon.
In the opposite direction, the U.S. Dollar Index rose by 0.38% to 107.56 against a basket of foreign currencies.
The United States has imposed a 10% tariff trade on imported goods from China and 25% on imports of aluminum and steel from Canada and Mexico this month. But, effective March 4, the Trump administration is expected to levy an additional 10% on Chinese imports, 25% on imported goods from Mexico and 10% on Canadian energy imports. Meanwhile, reciprocal trade tariffs are set to be levied on April 2.
The Biden and Trump administrations have imposed stricter sanctions on Russian and Iranian oil trades. This week, the U.S. government also announced the cancellation of Chevron's permit to produce and export Venezuelan oil starting this week.
These measures were expected to put upward pressure on oil prices. However, weak global demand and ample supplies of U.S. crude recently reported have maintained oil futures markets bearish instead, due to the uncertainty surrounding the impact of the trade tariff war on the global economy.
