DTN Oil Update
Oil Futures Drop After February PCE Rises
HOUSTON (DTN) -- Oil futures edged down Friday morning, tracking a higher-than-expected U.S. inflation increase in February amid growing concerns about additional trade tariffs from the United States on its trade partners beginning April 2.
The Core Personal Consumption Expenditures (PCE) Index, excluding food and energy, rose 0.4% in February year-over-year, above market expectations of a 0.3% increase, the Bureau of Economic Analysis reported Friday morning. The PCE is considered a key inflation measure for the Federal Reserve.
Sticky inflation has been impacting the U.S. economy since the COVID-19 pandemic, and the trade war is expected to cause further inflationary pressures and affect economic growth.
The uncertainty generated by the trade tariffs has set a bearish tone in oil futures markets since U.S. President Donald Trump took office on Jan. 20.
The April 2 deadline set by the Trump administration imposes additional tariffs on imports from China, Canada, Mexico, and the European Union, all of which have responded with retaliatory tariffs as well.
This week, Trump announced the implementation of a 25% tariff on car and auto part imports starting next week, aimed at boosting domestic production.
Volatility in the oil futures market was briefly eased after the Energy Information Administration reported a 3.3-million-barrel draw in U.S. commercial crude oil inventories in the week ending March 21. This was the first drop in 10 weeks -- and the largest since December -- placing inventories at 433.6 million bbl, down 14.6 million bbl, or 3.3%, year-over-year.
The figure was below the 4.6-million-bbl inventory draw reported by API on Monday, March 25 for the same reference week.
The front-month NYMEX West Texas Intermediate futures contract for May delivery edged down by $0.12 to $69.82 bbl, still resisting a move past the $70 mark. The May ICE Brent futures contract fell by $0.10 to $73.09 bbl. The April RBOB futures contract rose by $0.0019 to $2.2483 gallon, while the front-month ULSD futures contract dropped by $0.0087 to $2.2760 gallon.
The U.S. Dollar Index fell 0.17% to 103.83 against a basket of foreign currencies.
