DTN Oil Update
Oil Futures Fall on Inflation, Tariff War Concerns
HOUSTON (DTN) -- Oil futures were bearish to close the week Friday, driven by 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 next week.
The front-month NYMEX West Texas Intermediate futures contract for May delivery dropped by $0.63 to $69.29 barrel (bbl), still resisting a move past the $70 mark. The May ICE Brent futures contract fell by $0.45 to $73.58 bbl. The April RBOB futures contract declined by $0.0144 to $2.2320 per gallon, while the front-month ULSD futures contract dropped by $0.0219 to $2.2628 per gallon.
The U.S. Dollar Index fell 0.28% to 103.71 against a basket of foreign currencies.
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 affected the U.S. economy since the COVID-19 pandemic. However, the Federal Reserve maintained its interest rate policy unchanged last week and reiterated its expectation to cut rates twice this year, despite some analysts anticipating inflationary pressures due to the trade war.
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 Trump administration is scheduled to impose additional tariffs on imports from China, Canada, Mexico, and the European Union, all of which have responded with retaliatory tariffs as well.
On Wednesday, ahead of the April 2 deadline to impose the additional tariffs, Trump announced a 25% tariff on car and auto part imports starting next week, aimed at boosting domestic production.
Also, eight OPEC+ countries (Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman) are expected to start a gradual increase of 2.2 million barrels per day (bpd) in global output next week.
