DTN Oil Update
Oil Futures Hit a 4-Year Low on Tariffs, WTI Trades at $55, Brent at $58
HOUSTON (DTN) -- Oil futures continued nosediving for the fifth consecutive session on Wednesday morning, with the two main benchmarks hitting their lowest levels since September 2021. The drop was driven by additional tariffs going into effect Wednesday, including total duties of 104% on China, which has responded with a reciprocal tax on U.S. imported goods.
The front-month NYMEX WTI crude contract for May delivery plummeted by $2.61 to $56.97 bbl, but was traded at a low of $55.12 earlier, while ICE Brent crude for June delivery plunged by $2.71 to $60.11 bbl, but was also traded at $58.40 bbl. Both benchmarks hit their lowest level since September 2021, according to DTN Energy data.
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Downstream RBOB gasoline for May dropped by $0.0721 to $1.9193 gallon while the front-month ULSD fell by $0.0872 to $1.9698 gallon.
The U.S. Dollar Index dropped by 0.886 points to 101.595 against a basket of foreign currencies.
The trade war between the United States and China, and the implementation of a 10% global tariff imposed by the U.S. on all countries this week, have increased fears of a global economic growth slowdown and a potential recession in the U.S. amid abundant oil supplies and weak demand.
China's Customs Tariff Commission announced Wednesday its decision to raise a trade tariff from 34% to 84% on imported goods from the U.S., effective Thursday, April 10. This reciprocal tariff was in response to the extra 84% tariff on Chinese imports announced Tuesday, April 8, by U.S. President Donald Trump, in addition to 10% tariffs levied in February and 10% in March.
Meanwhile, EU trade ministers met this week to coordinate a response to the U.S. steel and aluminum tariffs and reiterated interest in negotiating a zero-tariff trade deal.
Wednesday marks the deadline for the U.S. to impose 84% tariffs on Chinese goods, while EU imports are set to face a 20% tariff, and Japanese goods a 24% levy. Canada and Mexico remain exempt.
Abundant global supply is another factor contributing to bearish sentiment in the oil futures markets, after OPEC+ decided earlier this month to add 411,000 bpd, equivalent to three monthly increments in May.
In the domestic market, the American Petroleum Institute reported Tuesday commercial crude oil supply declined by 1.06 million bbl in the week ending April 4. In contrast, gasoline stocks increased by 207,000 bbl, while distillate fuel supply declined by 1.84 million bbl during the same period.
