DTN Oil Update
Oil Futures Drop on Tariffs Concerns and PPI Data
HOUSTON (DTN) -- Oil futures dropped Thursday morning, driven by concerns surrounding the trade tariff war after EU and Canada implemented retaliatory taxes on U.S. imported goods Wednesday, March 12.
The NYMEX WTI futures contract for April delivery edged down by $0.63 to $67.05 bbl while the ICE Brent futures contract for May delivery fell by $0.60 to $70.35 bbl, both crude benchmarks were under pressure due to Energy Information Administration and the American Petroleum Institute data showing increasing crude inventories last week.
The EIA reported commercial crude oil inventories in the U.S. rose by 1.4 million bbl to 435.2 million bbl in the week ending March 7. This was below the 4.247 million bbl build reported by API Tuesday, March 11, for the same reference week.
Downstream April RBOB futures contract fell $0.0130 to $2.1933 gallon and April ULSD futures dropped by $0.0034 to $2.1467 gallon.
Last week, gasoline inventories saw the steepest fall last week dropping 5.7 million bbl week-over-week to reach 241.1 million bbl, in the week ended March 7, according to EIA. This was above the 4.56 million bbl drop reported by API for the same period.
Distillate fuel stocks fell by 1.6 million bbl to 117.6 million bbl last week, according to EIA, which was larger than the 421,000 bbl draw API reported for the same week.
The bearish sentiment also was supported by a lower-than-expected Producer Price Index in February. The PPI for final demand rose 3.2% in February on an annual basis, compared to a 3.7% increase in January, the U.S. Bureau of Labor Statistics reported Thursday morning. This was below the market expectation of a 3.3% increase. On a monthly basis, the index for final demand was unchanged, according to the same report.
Market participants continue focused on the developments of the trade war tariffs after the European Union announced Wednesday that it will increase tariffs on American beef, poultry, bourbon, motorcycles, peanut butter and jeans. Meanwhile, AP reported that Canada, the largest supplier of steel and aluminum to the U.S., will place 25% reciprocal tariffs on steel and other products.
The U.S. Dollar Index increased by 0.40% to 103.9 against a basket of foreign currencies.
