DTN Oil Update
Oil Futures Rose Despite Ongoing Recession Fears
HOUSTON (DTN) -- Oil futures recovered on Tuesday from losses recorded during the previous trading session, which were driven by concerns of a possible recession in the United States this year, due to the potential impact of the trade tariff war on the country's economic growth.
After the front-month NYMEX WTI futures contract traded on Monday below the $66 mark, the crude benchmark price rebounded by $0.68 to $66.71 bbl Tuesday morning, while the ICE Brent futures contract for May delivery rose by $0.74 to $70.02 bbl. Downstream, RBOB futures contract for April delivery rose by $0.0235 to $2.1160 gallon while the April ULSD futures contract fell by $0.0190 to $2.1989 gallon.
In the opposite direction, the U.S. Dollar Index returned to a bearish territory by falling 0.18% to 103.99 against a basket of foreign currencies.
The downward trend seen in oil futures market in recent weeks is expected to continue as analysts have started to discuss the possibility of a recession in the U.S. this year. Analyst are forecasting a more negative impact of the tariff war, initiated by the Trump administration, on the domestic economy and consumer prices than previously expected.
Last week, the Atlanta Federal Reserve forecasted that the U.S. GDP is expected to be at -2.4% in the first quarter of the year, down from a 2.3% expansion reported in February.
Meanwhile, market participants maintain their focus on the tariffs imposed by the United States on its trade partners, China, Canada and Mexico, which are also expected to impact global demand for energy products.
U.S. President Donald Trump declared, for the second time, a one-month pause last week on additional trade tariffs levied on some imported goods from Canada and Mexico, which were schedule to go into effect on 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 ranging from 10% to 15%, levied by China on multiple U.S. agricultural goods, are also anticipated to take effect this week in response to the 20% tax on imported Chinese goods implemented by the United States government.
On economic data, the U.S. Bureau of Labor Statistics (BLS) is scheduled to release Tuesday the Job Openings and Labor Turnover data for January. The job openings level reached 7.6 million in December, and the market is anticipating a similar level for January.
The BLS is also expected to release U.S. inflation data for February on Wednesday, March 12, with a market forecast for year-over-year inflation is 3%. U.S. consumer prices rose 0.5% in January, bringing the annualized inflation rate to 3%.
