Oil posted the biggest monthly loss since September as US President Donald Trump’s escalating tariff threats reduce investors’ risk appetite, strengthen the dollar and cloud the outlook for energy demand.
West Texas Intermediate futures slid almost 1% to settle below $70 a barrel and wrapped up the month 3.8% lower. Trump affirmed the March 4 start of levies on imports from Canada and Mexico, which are the biggest suppliers of foreign oil to the US. He also threatened to double an existing tariff on imports from China, and Mexico is offering to follow suit in an attempt to stave off US levies. Beijing vowed countermeasures.
Crude also notched its sixth consecutive weekly loss, dragged down by hawkish US trade policy, as well as weak economic data. Algorithmic-driven investors known as commodity trading advisers are seizing on the gloom to build a net-short position in oil for the first time since late December, said Daniel Ghali, a commodity strategist at TD Securities.
The potential tariffs may have a complex effect on crude prices. The US relies heavily on oil imports from Canada and Mexico to feed its refineries, and a levy could raise oil costs. At the same time, higher charges on all other goods pose risks to economic growth, consumer confidence and energy consumption.
Attempts to broker an end to the Russia-Ukraine war added come choppiness to the market Friday, after Trump’s much-awaited meeting with Ukrainian President Volodymyr Zelenskiy ended with a tense exchange. The two leaders failed to sign a deal that was set to make the US a major partner in extracting Ukraine’s commodities, including oil and gas, as well as minerals and rare earths.
On the supply side, pipeline exports from Iraq’s Kurdistan region may be restarted, and OPEC+ is expected to defer a production increase once again.
Oil Prices:
- WTI for April delivery dipped 0.8% to settle at $69.76 a barrel in New York.
- Brent for April settlement, which expires Friday, fell 1.2% to settle at $73.18 a barrel.
- The more-active May contract declined to $72.81.
Source: By Mia Gindis and Alex Longley from Rigzone.com