WTI Rises in Volatile Session as Tariff Delay Eases Fears
by Bloomberg | Julia Fanzeres, Alex Longley and Jacob Wendler
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Oil edged higher after a volatile session as US President Donald Trump’s tariffs on Mexico were delayed by a month and investors assessed the levies’ potential to slow global economic growth, undercutting concerns about short-term supply constraints.
West Texas Intermediate rose 0.9% to end the session above $73 a barrel, paring an earlier gain of as much as 3.7%, after Mexico President Claudia Sheinbaum said tariffs on her country would be pushed back by one month after a conversation with Trump on Monday.
Trump also spoke with Canadian Prime Minister Justin Trudeau and said he’d talk with him again later on Monday, opening the prospect of a last-minute deal. Trump announced earlier that Canadian energy exports would be taxed at 10%, lower than the 25% tariffs previously announced.
WTI futures jumped earlier in the session, outpacing the gain in global benchmark Brent, reflecting potentially higher demand for US supplies to backfill any reduction in the 4 million barrels a day that flow to the US from Canada. The gains later faded — and WTI even briefly turned negative — as falling equities markets and a gain in the dollar signaled investors’ concerns that the trade war will hamper the global economy.
“Tariffs on the US’s largest crude oil supplier are providing a boost to crude oil prices and in particular refined product prices,” said Warren Patterson, head of commodities strategy for ING Groep NV. “While this may be supportive in the very short term, we may not need to wait too long for a risk-off move as it raises concerns over global growth.”
In addition to Canadian flows, the US also imports about 500,000 barrels of crude a day from Mexico. Reflecting expectations that refiners will face higher costs, gasoline futures soared as much as 6.5% in New York.
Crude has fallen since Trump, who has also pledged to “definitely” impose tariffs on the European Union, was inaugurated on Jan. 20, driven by the threat tariffs pose to growth and his calls for OPEC to lower prices. Despite Trump’s push, OPEC+ didn’t make any changes to its existing oil-production plans at a review meeting on Monday.
Fuel producers in the Midwest rely on Canada’s heavy crude, and the impact will also be felt at the storage hub in Cushing, Oklahoma, which helps price US crude futures, as well as on the Gulf Coast, where Mexican supplies will be subject to a 25% levy.
Refiner Irving Oil Ltd., which operates the 320,000-barrel-a-day Saint John refinery in New Brunswick that sells most of its fuels to the US, has already begun boosting prices.
“The symbiotic relationship between Canadian producers and refiners in the Midwest is no secret,” Barclays analyst Amarpreet Singh wrote in a note. “Nor are the limited avenues for substitution for both, but Canadian producers are arguably more vulnerable simply because refiners can be a bit more flexible and midstream constraints are less severe for them.”
Oil Prices:
- WTI for March delivery rose 0.9% to settle at $73.16 a barrel in New York.
- Brent for April settlement climbed 0.4% to $75.96 a barrel.
by Bloomberg | Julia Fanzeres, Alex Longley and Jacob Wendler
click here to read this article at Rigzone.com
*this article was not written by Roseland Oil & Gas