DTN Oil Update
Oil Futures Drop Following a Crude Stocks Build, Tariffs
HOUSTON (DTN) -- The crude oil futures market remained under downward pressure Wednesday morning, driven by American Petroleum Institute data showing a build in commercial crude oil inventories last week, coupled with expectations of additional trade tariffs to be announced Wednesday afternoon.
The American Petroleum Institute reported Tuesday, April 1, a weekly build of 6.07 million bbl in commercial crude oil inventory for the week ending March 28. Crude oil stocks at the Cushing, Oklahoma, tank farm, the delivery point for New York Mercantile Exchange West Texas Intermediate futures, rose 2.244 million bbl last week, the same data showed.
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Downstream, API reported gasoline and distillate stocks declined 1.62 million bbl and 11,000 bbl, respectively, last week.
The bearish tone in oil futures was supported by expectations of trade tension due to sweeping tariffs that the Trump administration will levy on all countries trading with the United States.
The U.S. government has imposed 20% tariffs on imports from China, 25% on steel and aluminum from Canada and Mexico, 25% on imported goods from the European Union, and 25% on foreign car imports.
U.S. President Donald Trump is scheduled to unveil at 4 p.m. EDT Wednesday, the details of reciprocal import tariffs with other countries. However, economists and analysts predict a negative effect from this measure on global economic growth, causing inflationary pressures and the possibility of a recession in the U.S. economy.
Traders are also focused on additional global supply from OPEC+ countries, which is expected to add 2.2 million bpd starting Wednesday.
Recent sanctions imposed by the United States on Iranian and Venezuelan oil trade, aiming to reduce their oil exports to zero, were expected to put upward pressure on oil futures prices. However, the potential effect of these sanctions has been offset due to expectations of abundant supplies from OPEC+ producers.
The front-month NYMEX West Texas Intermediate futures contract for May delivery fell by $0.29 to $70.91 bbl while the May ICE Brent futures contract dropped by $0.34 to $74.15 bbl. In contrast, the May RBOB futures contract rose by $0.0020 to $2.3045, while the front-month ULSD futures contract rose by $0.0060 to $2.2949 gallon.
The U.S. Dollar Index reversed gains recorded in recent trading sessions, dropping by 0.32% to 103.63 against a basket of foreign currencies.
