Oil Recovers on Trade Tariff Reprieve

Oil eked out a marginal gain after a session of whipsawing as US President Donald Trump’s moved to delay tariffs on imports from Canada and Mexico.  

West Texas Intermediate settled little changed above $66 a barrel, snapping a four-day straight losing streak by a hair. Brent edged up slightly to top $69 after touching the lowest since late 2021 on Wednesday.

Diverging supply signals sparked fluctuations for prices on Thursday. On the one hand, Trump’s tariff threats have prompted some analysts to reconsider how low crude may tumble if the trade wars weigh on economic growth and energy demand. However, the prospect of levies have also been interpreted as somewhat supportive for WTI prices as the benchmark may see increased demand to replace diverted Canadian and Mexican supplies.

Trump said that he’ll defer tariffs on Mexico and Canada for all goods covered by the North American trade agreement known as USMCA, which includes energy. Commerce Secretary Howard Lutnick telegraphed the decision earlier in the day, saying Trump was weighing the move.

The White House estimates that 62% of Canadian imports will still be subject to the tariffs, most of which are energy products that are being tariffed at a 10% rate, and half of goods coming from Mexico.

WTI’s prompt spread — the difference between its two nearest contracts — narrowed to 36 cents following the tariff reprieve, a sign of potentially looser market conditions. Canadian heavy crudes rallied on the tariff postponement.

Futures have tumbled since mid-January as Trump’s trade policies rattle global markets and America’s neighbors ready countermeasures. OPEC+ also surprised markets with plans to start reviving idled production in April, adding to the bearish headwinds.

Brent futures into oversold territory for the first time since September based on one technical gauge. The term implies the recent lurch lower has been excessive.

In recent days, oil has been “selling off as OPEC+ has changed its strategy and priorities, but surplus hasn’t fully arrived quite yet,” said Bjarne Schieldrop, chief commodities analyst at SEB AB.

Prices also drew support Thursday on comments from Treasury Secretary Scott Bessent, who said that the US is willing to go “all in” on sanctions against Russia to achieve a ceasefire in the Ukraine war. He also threatened Iran’s oil flows, adding that the US will “shut down” the nation’s oil sector.

Oil Prices:

• WTI for April delivery increased 5 cents to $66.36 a barrel in New York.
• Brent for May delivery edged up 16 cents $69.46 a barrel.

 

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