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Oil prices edged up on Thursday, partially recovering from the previous day’s drop, after Saudi Arabia’s state-owned oil company raised its March crude prices sharply. However, the gains barely made a dent in the significant decline of Brent crude the day before.
Oil Price Movements
- Brent Crude Futures: $74.89 (+0.4%)
- U.S. West Texas Intermediate (WTI) Crude: $71.38 (+0.5%)
Recent Market Developments
- Wednesday’s Decline:
- Oil prices fell more than 2% on Wednesday, driven by a large build in U.S. crude and gasoline stockpiles, indicating weaker demand.
- U.S.-China Trade Tariffs: Investors were also assessing the effects of a new round of U.S.-China trade tariffs, including duties on energy products.
- Price Drop Since January 15:
- Oil prices have dropped by about 10% since January 15, just days before Donald Trump took office.
Saudi Arabia’s Move to Stabilize Prices
- Saudi Aramco Price Hike:
- Saudi Arabia raised its crude prices for Asian buyers, which helped stem the sell-off that took place on Wednesday.
- Market Reactions: The increase in prices is expected to prompt short-covering by traders ahead of a strong support band between $70 and $68 per barrel.
Market Volatility Ahead
- Volatility Outlook:
- BMI analysts predict significant volatility in oil prices in the coming weeks as markets try to assess the impact of Trump’s new policy positions, particularly regarding tariffs.
Trade War Impact on Oil
- U.S.-China Tariffs:
- Trump’s Tariffs on China: Trump has swiftly imposed tariffs on Chinese goods, including energy products.
- China’s Response: Beijing retaliated by announcing tariffs on U.S. oil, LNG, and coal, but these measures are unlikely to have a significant impact on oil trade, as China’s imports from the U.S. are relatively modest.
Short-Term Outlook
- The sharp price increase by Saudi Arabia and market support at the $70–68 range may provide some relief to oil prices in the near term, though broader trade war uncertainties and global demand concerns continue to exert pressure on the market.
