Oil dropped after OPEC+ agreed to another large output increase, raising concern that additional supply could lead to a global glut just as the trade war threatens demand.
Trump lashed out at remarks made by Putin, who questioned the legitimacy of Ukrainian President Volodymyr Zelensky’s government and suggested that a change in leadership may be necessary for a peace deal to be valid. Putin has consistently emphasized that elections in Ukraine will have to precede any ceasefire deal.
The tariffs threaten to disrupt North America’s tightly integrated oil industry and raise demand for US crude to backfill any Canadian or Mexican barrels that are diverted elsewhere to avoid the levies. Still, the tariffs’ effects may be blunted by the fact that many American refineries were built to handle those countries’ heavy crudes, rather than domestically produced light oil, leaving them limited options for substitution. The US receives about about 4 million barrels a day from Canada and about 400,000 barrels a day from Mexico.
Crude oil inventories in the United States saw a decrease of 2.3 million barrels during the week ending February 21, according to new data from the U.S. Energy Information Administration released on Wednesday.
OPEC+ is considering pushing back its planned output increase due in April, potentially the fourth time it has delayed bringing back production. Adding to the prospect of tighter supplies, as much as 30% of oil exports from a major Kazakh pipeline to the Black Sea may be halted after a Ukrainian drone attacked a pumping station in Russia. The Group of Seven also is considering tightening the price cap on Russian crude exports, possibly curbing supplies further.
West Texas Intermediate’s front-month futures were trading at as little as 1 cent more per barrel than contracts for the next month out, down from a premium of $1.52 about a month ago. It’s the weakest the so-called prompt spread has been since November, when it turned negative in a bearish structure known as contango. WTI’s March futures slid to settle below $71 a barrel.
Oil fell 2% to settle below $69 a barrel as tepid US economic data undercut OPEC+’s progress on a deal to keep output constrained.
Oil prices have eased after concerns over potential supply disruptions from Storm Rafael in the US Gulf of Mexico subsided.
Brent and WTI are set to post a more than 4% gain this week
The total number of active drilling rigs for oil and gas in the United States fell again this week, according to new data that Baker Hughes published on Friday.