DTN Oil Update
Oil Futures Fall as Trade Tariff Uncertainty Prevails
HOUSTON (DTN) -- Oil futures continued their downward trend Thursday morning, driven by uncertainty fueled by the trade war between the United States and China, as well as the announcement of a 90-day pause on tariffs levied on some non-retaliatory countries.
While much of the attention is focused on tariffs and their impact on global economic growth, the market appeared to ignore U.S. Bureau of Labor Statistics data (BLS), released Thursday, which showed a drop in the U.S. Consumer Price Index (CPI) for March.
The CPI decreased 0.1% in March, after an increase of 0.2% in February, bringing the annualized rate of inflation for the all-items index to 2.4%, BLS data showed. The figure was below the market expectation of a 0.1% increase.
Despite a decline in the gasoline index, the energy index fell 2.4% in March -- compared to a 0.2% increase recorded in February -- as a 6.3% drop in the index for gasoline offset increases in the indexes for electricity and natural gas, according to BLS.
The front-month NYMEX WTI crude contract for May delivery fell by $2.81 to $59.54 bbl while the front-month ICE Brent crude contract dropped by $2.82 to $62.66 bbl.
May RBOB gasoline futures fell by $0.0842 to $1.9542 gallon while the front-month ULSD contract declined by $0.0731 to $2.0405 gallon.
The U.S. Dollar Index decreased by 1.33 points to 101.29 against a basket of foreign currencies, which include the euro, Japanese yen, and Canadian dollar, among others.
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.
Oil futures are also anticipated to remain bearish due to weak global oil demand, as the trade war is expected to negatively impact China's economic growth, the world's largest buyer of oil and gas.
