DTN Oil Update
Oil Futures Slid to Multi-Year Lows, WTI Hits $61, Brent $65
HOUSTON (DTN) -- Oil futures continued to nose-dive to multi-year lows Friday morning after China announced Friday, April 4, retaliatory trade tariffs on imported goods from the U.S. starting next week, in response to the import tax levied by the Trump administration on Chinese imports Wednesday, April 2.
The front-month NYMEX WTI futures contract for May delivery plummeted for the second consecutive trade session, dropping by $5.15 to $61.83 bbl, which is the lowest level recorded since Jan. 12, 2022. The May ICE Brent futures contract dropped by $4.87 to $65.27 bbl, marking its lowest price since Dec. 6, 2021. The May RBOB futures contract plunged by $0.1179 to $2.1643 while the front-month ULSD futures contract dropped by $0.1178 to $2.07 gallon.
In contrast, the U.S. Dollar Index recovered from losses recorded Thursday, April 3, rising by 0.13% to 101.92 against a basket of foreign currencies, including the euro, Japanese yen, British pound, Canadian dollar, among others.
China will impose additional 34% tariffs on all products imported from the United States starting from April 10, the Customs Tariff Commission of the State Council announced Friday, according to China's 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.
U.S. President Donald Trump announced Thursday, April 3, a 10% baseline tariff for all countries effective April 5 and unveiled additional reciprocal tariffs on China and the European Union. However, the tariff will not be imposed on imports from Mexico and Canada for now.
Trump announced reciprocal tariffs on several countries trading with the United States, including an additional 34% trade tariff on imported goods from China, 20% on imports from the European Union, and a 24% import tax for Japan, among others. These tariffs will begin April 9.
In the last two months, the U.S. government has already imposed 20% tariffs on imports from China, 25% on steel and aluminum from Canada and Mexico, and 25% on imported goods from the European Union, all of which have responded with retaliatory tariffs against U.S. imports.
Also, the United States imposed a 25% trade tariff on foreign car imports, which will be effective Friday, April 4.
The selloff in the oil futures market also was driven by the higher-than-expected impact of the trade war on global economic growth and the expectation of a decline in global oil demand amid downward pressure caused by additional oil output from OPEC+ countries.
The oil cartel was scheduled to offer an extra 2.2 million bbl starting this week.
