DTN Oil Update

Maria Eugenia Garcia
DTN Energy Editor

HOUSTON (DTN)-- Oil futures were steady Monday morning, recovering from weekly losses driven by trade tariff concerns, despite expectations of ample supplies, decent fundamentals, and weak demand from China.

The NYMEX WTI futures contracts for April delivery inched up by $0.08 to $67.12, front-month ICE Brent futures contract was unchanged at $70.01. RBOB futures contract for April delivery rose by $0.0085 to $2.1172 gallon while the April ULSD futures contract fell by $0.0048 to $2.2112 gallon.

The U.S. Dollar Index fell by 0.10% to 103.71 against a basket of foreign currencies.

Oil futures traders remain focused on the trade war tariff initiated by the U.S. government. President Donald Trump ordered these tariffs on main trade partners: China, Canada and Mexico. Last week, the Trump administration declared a one-month pause on additional trade tariffs levied on some imported goods from Canada and Mexico, which were scheduled to go into effect March 4. However, a 25% tax on imports on aluminum and steel from Canada and Mexico is expected to go into effect this week.

Meanwhile, retaliatory tariffs from China ranging from 10% to 15% on multiple U.S. agricultural goods will take effect this week, in response to the 20% tax on imported Chinese goods levied by the U.S. to date.

The impact of these tariffs on the Chinese economy is expected to have a negative effect in the oil demand from this country, the largest buyer of crude in the world. A hike of the Chinese inflation in February is seen as a sign of economic weakness, though the full impact of the tariffs has not yet been reflected.

China's consumer prices the CPI rose by 0.1% year-on-year in February, according to National Bureau of Statistics data. The increase was driven by a hike in prices during the Spring Festival holiday and fluctuations in global commodity prices, China's Xinhua news agency said. In February, Chinese oil exploitation prices dropped by 5.1% year-over-year.

Meanwhile, the U.S. Bureau of Labor Statistics is scheduled to release February's CPI data on Wednesday. The market expectation for year-over-year inflation is 3%. U.S. consumer prices rose 0.5% in January, bringing the annualized inflation rate to 3.0%. The increase was driven by higher energy and food costs, with gasoline prices climbing 1.2% in the month.