DTN Oil Update
Crude Oil Futures Slid Amid Escalating Trade War, New Tariffs
TACOMA, Wash. (DTN) -- Oil futures plunged to multi-year lows Friday after China announced a new round of retaliatory tariffs on U.S. imports, set to take effect next week. The move is in response to import duties imposed earlier this week by the Trump administration.
The front-month WTI crude contract for May delivery on the NYMEX fell for the second straight session, settling at $61.99 barrel (bbl), a decrease of $4.96. All-in-all, WTI crude has decreased by nearly $10 in two trading sessions. June ICE Brent decreased to $65.72 bbl, a $4.33 drop from the last settle of $70.14 bbl.
The May RBOB futures contract settled at $2.0545 gallon, with prices down $0.1067 May ULSD futures settled at $2.0819, down $0.1063 .
The U.S. Dollar Index rose by 1.12%, settling at 102.920 against a basket of foreign currencies, including the euro, yen, pound, and Canadian dollar.
China's Customs Tariff Commission said Friday it will impose a 34% tariff on all U.S. imports beginning April 10, according to state-run news agency Xinhua.
"The announcement follows the U.S. decision to impose 'reciprocal tariffs' on Chinese exports to the United States, a move that the commission said does not conform to international trade rules, seriously undermines China's legitimate rights and interests, and represents a typical act of unilateral bullying," the report stated.
On Thursday, April 2, President Donald Trump announced a 10% baseline tariff on all imports, effective April 5, in addition to specific tariffs targeting China and the European Union. Imports from Mexico and Canada are currently exempt.
Under the new measures, imports from China face a 34% tariff, the EU 20%, and Japan 24%. These tariffs are scheduled to begin April 9.
In the past two months, the United States has already implemented tariffs of 20% on Chinese imports, 25% on steel and aluminum from Canada and Mexico, and 25% on EU goods. Each of these regions has responded with tariffs of their own on U.S. exports.
A separate 25% tariff on foreign car imports took effect Friday (4/4).
Adding to market volatility, the Bureau of Labor Statistics reported Friday that U.S. nonfarm payrolls rose by 228,000 in March, beating expectations for 140,000. However, the unemployment rate ticked up to 4.2% from 4.1%. Revisions lowered job gains in January and February by a combined 48,000. Average hourly earnings increased by 9 cents to $36.00.
Despite the stronger dollar and jobs data, oil prices remained under pressure amid fears of weakening global demand and the economic fallout from escalating trade tensions.
Additional downward pressure came from OPEC+, which began ramping up output this week by an expected 2.2 million barrels per day.
