DTN Oil Update
Oil Futures Rebound From Multi-Year Lows on 90-day Tariff Pause
TACOMA (DTN) -- Oil futures settled higher Wednesday after earlier falling to their lowest levels since September 2021, following U.S. President Donald Trump's announcement of a 90-day pause on tariffs levied on 75 non-retaliatory countries.
A sharp intraday decline was followed by a rebound in afternoon trading as traders reacted to the new tariff measures enacted by the Trump administration.
The front-month NYMEX WTI crude contract for May delivery settled at $62.79 barrel (bbl), up $3.21 from the previous day's settle of $59.58. It traded as low as $55.12 during the session. ICE Brent crude for June delivery settled at $65.86 bbl, up $3.04 from Tuesday's $62.82 settle. Brent reached an intraday-low of $58.40.
May RBOB gasoline futures settled at $2.0441 gallon, up $0.0527 from the previous settlement of $1.9914. The front-month ULSD contract settled at $2.1189 gallon, up $0.0619 from $2.0570 on Tuesday.
The U.S. Dollar Index settled at 102.715 on Wednesday, an increase of 0.14 from the previous close of 102.701.
On Wednesday, the United States raised tariffs on Chinese imports to 125%, following President Trump's announcement of an additional 84% levy the previous day. Earlier tariff rounds of 10% were implemented in February and March. In response, China's Customs Tariff Commission announced it would raise tariffs on U.S. goods from 34% to 84%, effective Thursday, April 10.
Alongside these actions, the Trump administration introduced a 90-day pause on reciprocal tariffs for most other countries, reducing them to a flat 10% while trade officials from the Departments of Commerce, Treasury, and the U.S. Trade Representative conduct negotiations with over 75 nations. The pause excludes China, and existing sector-specific tariffs, such as those on automobiles, remain in effect.
European Union trade ministers met this week in Brussels to discuss a response to U.S. tariffs on steel and aluminum. The ministers also stated their support for a zero-tariff trade agreement.
Imports from the European Union are now subject to a 20% tariff, and Japanese goods face a 24% tariff. Imports from Canada and Mexico are not affected by the new measures.
Despite the bullish sentiment seen today, oil futures markets will remain under downward pressure due to abundant supply and weak demand fundamentals.
Earlier in April, OPEC+ member states agreed to increase oil production by 411,000 bpd starting in May. The group previously implemented production limits through coordinated supply management. Additionally, the trade war is expected to negatively impact China's economic growth, the world's largest buyer of oil and gas.
Separately, the American Petroleum Institute reported Tuesday that U.S. commercial crude oil inventories declined by 1.06 million bbl during the week ending April 4. Gasoline inventories rose by 207,000 bbl. Distillate fuel inventories declined by 1.84 million bbl during the same period.
