MW Oil prices extend slide on tariff worries, OPEC+ production plans

By William Watts

Traders await official U.S. inventory data after industry figures show drop in crude stocks

Oil futures were on track for a four-day losing streak Wednesday, extending losses on worries over prospects for a global trade war that could dent demand as traders also weighed plans by the Organization of the Petroleum Exporting Countries and its allies to begin unwinding production cuts next month.

Price moves

-- West Texas Intermediate crude CL00 for April delivery CL.1 CLJ25 fell $1.19, or 1.7%, to $67.07 a barrel on the New York Mercantile Exchange.

-- May Brent crude BRN00 BRNK25, the global benchmark, was down 89 cents, or 1.3%, at $70.15 a barrel on ICE Futures Europe.

Market drivers

Brent on Tuesday closed at its lowest since mid-November after briefly trading below the $70-a-barrel threshold for the first time since Oct.1, after President Donald Trump imposed 25% tariffs on imports from Mexico and Canada and added an additional levy of 10% on imports from China. Canada and China immediately retaliated, while Mexico said it would deliver its response on Sunday.

After U.S. markets closed Monday, Commerce Secretary Howard Lutnick indicated some tariff relief may be in the offing, but "heightened uncertainty is sending investors to the sidelines," commodity strategists at ING said in a note, pointing to a further fall in speculative positioning in both WTI and Brent futures in recent weeks.

OPEC+ has also weighed on prices, announcing earlier this week that it would proceed with plans to begin unwinding production curbs in April. Analysts had widely expected a further delay. Meanwhile, Trump reiterated his call to boost U.S. crude production during his address to Congress on Tuesday night.

The crude-oil market "finds itself in the worst of all worlds right now," Michael Brown, senior research strategist at Pepperstone, said in a note.

"OPEC+ will, surprisingly, be going ahead with their planned supply hikes from April onwards, right as the U.S. economy stalls, China continues to struggle, and [Trump and Treasury Secretary Scott Bessent] run around screaming 'drill baby, drill' at the top of their voices," he wrote. "All in all, that's probably as convincing a bear case as it's possible to build, and should see both Brent and WTI continue to slide, particularly now that the psychological floor at $70 a barrel has broken."

Traders will also be awaiting government data on U.S. inventories after industry figures showed a drop in U.S. crude stocks last week. That might provide support if affirmed, with analysts looking for the official data to show a rise.

The American Petroleum Institute, an industry group, reported late Tuesday that U.S. crude inventories fell 1.46 million barrels last week, according to a source citing the data, with gasoline stocks down 1.249 million barrels and distillates, which include diesel and heating oil, up 1.136 million barrels.

Official data from the Energy Information Administration is due Wednesday morning. On average, analysts polled by Platts, part of S&P Global Commodity Insights, expect the government agency to report a climb of 1.3 million barrels in domestic commercial crude stockpiles for the week ended Feb. 28. They also forecast weekly inventory declines of 700,000 barrels for gasoline and 800,000 barrels for distillates.

-William Watts

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March 05, 2025 06:52 ET (11:52 GMT)

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