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Oil prices showed little movement on Thursday, holding onto most of the losses from the previous session as uncertainty over U.S. President Donald Trump’s proposed tariffs and energy policies cast a shadow over global economic growth and energy demand.
By 1315 GMT, Brent crude futures edged up 18 cents to $79.18 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 14 cents to $75.58. The muted trading reflected market caution as investors weighed the potential impact of Trump’s aggressive trade and energy policies.
Trump’s Tariff Threats Loom Large
The broader economic implications of Trump’s proposed tariffs have raised concerns about a potential slowdown in global oil demand growth. Trump has threatened to impose new tariffs on Russia if the country fails to reach a deal to end its war in Ukraine. He has also vowed to target the European Union with tariffs and reinstate 25% duties on imports from Canada and Mexico. Additionally, the Trump administration is considering a 10% punitive duty on Chinese goods due to the flow of fentanyl from China to the United States.
These tariff threats have added to market uncertainty, with analysts warning that escalating trade tensions could further dampen global economic activity and energy demand.
Energy Emergency Declaration
On Monday, Trump declared a national energy emergency, a move intended to grant him greater authority to reduce environmental restrictions on energy infrastructure projects and streamline permitting for new transmission lines and pipelines. While this could boost U.S. energy production in the long term, it has also raised concerns about oversupply in the oil market.
Kelvin Wong, a senior market analyst at OANDA, noted that the lack of clarity on Trump’s trade and tariff policies, coupled with the potential for higher U.S. oil supplies, could lead to “more potential downward choppy movement in the oil market in the near term.”
U.S. Oil Inventories Rise
On the supply side, U.S. crude inventories increased by 958,000 barrels in the week ending January 17, according to data from the American Petroleum Institute (API) released on Wednesday. Gasoline stocks rose by 3.23 million barrels, while distillate inventories climbed by 1.88 million barrels. The build in inventories added to concerns about oversupply, further weighing on market sentiment.
Global Demand Concerns Persist
The combination of rising U.S. oil production, higher inventories, and the potential for weaker global demand due to Trump’s tariff policies has created a challenging environment for oil markets. While geopolitical tensions and supply disruptions in regions like the Middle East could provide some support to prices, the overarching theme remains one of caution.
Conclusion
Oil prices remain under pressure as markets grapple with the dual uncertainties of Trump’s trade policies and their potential impact on global economic growth, as well as the prospect of increased U.S. energy production. With inventories rising and demand concerns lingering, the near-term outlook for oil markets appears subdued. Investors will continue to monitor developments in trade policy, geopolitical tensions, and inventory data for clues on the next direction for crude prices.
