DTN Oil Update
Oil Futures Rise Awaiting Tariffs, Brent Hits $75
HOUSTON (DTN) -- Oil futures rose Wednesday, despite the Energy Information Administration and American Petroleum Institute reporting a draw in commercial crude oil, distillates stocks, and a fall in gasoline inventory last week, while the market remains in a wait-and-see mode ahead of the announcement of reciprocal tariffs this afternoon.
The EIA reported this morning that commercial crude oil inventories in the United States rose by 6.2 million barrels (bbl) to 439.8 million bbl in the week ended March 28. This was slightly above the 6.1-million-bbl build reported by API on Tuesday, April 1, for the same reference week.
Gasoline stocks dropped by 1.6 million bbl week-over-week to reach 237.6 million bbl in the week ended March 28, according to the EIA. The figure was flat compared to the decrease reported by API for the same period.
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Distillate fuel stocks rose 300,000 bbl to 114.6 million bbl last week, according to the EIA, which was larger than the 11,000 bbl increase API estimated for the same week.
The increase in crude and distillate inventory levels happened despite refinery utilization dropping to 86.0% from 87.0% reported the previous week.
Despite the hike in oil futures markets, volatility is expected to prevail in the coming weeks due to the expectation of trade tensions driven by sweeping tariffs that the Trump administration will levy on all countries trading with the United States starting today.
The U.S. government has imposed 20% tariffs on imports from China, 25% on steel and aluminum from Canada and Mexico, 25% on imported goods from the European Union, and 25% on foreign car imports.
U.S. President Donald Trump is scheduled to unveil today at 4:00 p.m. EDT the details of reciprocal import tariffs with other countries. However, economists and analysts predict a negative effect of this measure on global economic growth, causing inflationary pressures and the possibility of a recession in the U.S. economy.
The downward pressure in the oil futures market caused by the tariff war will also be affected by additional global supply from OPEC+ countries, which is expected to add 2.2 million bbl starting today.
Recent sanctions imposed by the United States on Iran and Venezuela oil trade, aiming to reduce their oil exports to zero, were expected to put upward pressure on oil futures prices. However, the potential effect of these sanctions has been offset due to expectations of abundant supplies from OPEC+ producers.
The front-month NYMEX West Texas Intermediate futures contract for May delivery rose by $0.62 to $71.82 bbl, while the May ICE Brent futures contract increased by $0.53 to $75.02 bbl. The May RBOB futures contract rose by $0.0274 to $2.0247, while the front-month ULSD futures contract rose by $0.0325 to $2.3214 gallon.
The U.S. Dollar Index reversed gains recorded in recent trading sessions, dropping by 0.46% to 103.49 against a basket of foreign currencies.
