DTN Oil Update
Oil Futures Rose on Ceasefire Outlook, Despite Tariffs Fears
HOUSTON (DTN) -- The front-month NYMEX WTI and ICE Brent futures contracts settled higher on Monday, driven by geopolitical news suggesting a possible ceasefire in the Russia-Ukraine war and recent air raids ordered by U.S. President Donald Trump targeting Houthi rebels, who are allegedly backed by the Iranian government.
The April NYMEX WTI futures contract edged up by $0.37 to $67.55 bbl while the front-month ICE Brent futures contract rose by $0.47 to $71.05 bbl. April RBOB futures contract climbed by $0.0312 to $2.1799 gallon and April ULSD futures increased creased by $0.0361 to $2.2027 gallon.
The U.S. Dollar Index fell by 0.24% to 103.5 against a basket of foreign currencies.
Russian President Vladimir Putin is expected to call President Trump Tuesday, March 18, after last Wednesday, Putin suggested that he would agree, in principle, to stop hostilities against Ukraine for a 30-day ceasefire, under certain conditions. The oil futures market has been bullish since the announcement, even though stricter sanctions on Russian oil trade, imposed by the administration of President Joe Biden, remain in place.
The recovery of the two crude benchmarks Monday was supported by the offensive that U.S. President Donald Trump ordered over the weekend targeting Houthi rebels in Yemen. The Trump administration promised "to use 'overwhelming lethal force' until the Iran-backed rebels cease their attacks on shipping along a vital maritime corridor," the Associated Press reported.
Meanwhile, market participants will focus on the Federal Reserve meeting scheduled for Tuesday and Wednesday, when its chair, Jerome Powell, is expected to announce the Fed's decision on interest rates. Last month, during his testimony before Congress, Powell stated there was no hurry to cut interest rates as the economy was in a good place.
However, Fed's decision could change after the confusion caused by punitive tariffs imposed by the Trump administration on its main trade partners in recent weeks, have raise concerns about a possible slowdown of the U.S. economy due to inflationary pressures.
The United States has imposed 20% tariffs on imported goods from China and 25% on steel and aluminum imports from Canada and Mexico. In immediate response, China and Canada levied retaliatory tariffs on some U.S. imports.
Goldman Sachs, Citigroup and Barclay's analysts have lowered their estimates for crude oil prices to an average of $60 due to the effect of the tariffs, according to media reports.
