Summary
• Investors await Trump’s move on Mexico, Canada tariffs
• US crude oil stockpiles up last week
• OPEC+ ministerial meeting on Feb. 3 in focus
(Reuters) – Oil prices were little changed on Thursday as investors focused on tariffs threatened by U.S. President Donald Trump on Mexico and Canada, the two largest suppliers of crude to the United States.
Brent crude futures were down 10 cents at $76.48 a barrel at 1318 GMT. U.S. crude futures were down 16 cents to $72.46. U.S. crude futures had settled at their lowest price this year on Wednesday.
“All oil considerations are in the shadow of what tariffs might be announced on Canada and Mexico,” said John Evans, an analyst at oil broker PVM. Markets are “mesmerised by what will come after February 1 when any trade restrictions are promised to be unveiled.”
The White House on Tuesday reaffirmed Trump’s plan to impose 25% tariffs on imports from Canada and Mexico. On Wednesday, the president’s nominee to run the Commerce Department said the two countries can avoid this if they act swiftly to close their borders to fentanyl.
However, IG market analyst Tony Sycamore said traders had already priced in Trump’s tariffs: “(this is) a major reason why crude oil is trading where it is.”
Winter storms hit U.S. demand last week, with crude oil stockpiles in the U.S. rising by 3.5 million barrels as refiners cut production. Analysts had expected a 3.2 million-barrel rise, according to a Reuters poll.
On the supply side, the latest U.S. sanctions on Moscow are squeezing crude oil exports from Russia’s western ports, which are set to fall 8% in February from the January plan as Moscow boosts refining, traders said and Reuters calculations showed.
Investors are also looking ahead to a meeting by the Organization of the Petroleum Exporting Countries and its allies including Russia, together called OPEC+, scheduled for Feb. 3.
The group is set to discuss Trump’s efforts to raise U.S. oil production and take a joint stance on the matter, Kazakhstan said on Wednesday.
Trump has called on OPEC and its leading member, Saudi Arabia, to lower oil prices, saying doing so would end the conflict in Ukraine. He has also set up an agenda of maximizing U.S. oil and gas production, already the world’s largest.
However, analysts believe a price war between the U.S. and OPEC+ is unlikely as it may hurt both.
“A price war with the U.S. would involve OPEC+ producers maximising their output to undercut prices and drive shale production into decline,” analysts at BMI, a Fitch Group division, said in a note.
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