MW Oil touches lowest prices since September on tariff worries, OPEC+ output plans

By Myra P. Saefong and William Watts

U.S. commercial crude supplies post weekly climb

Oil headed lower for a fourth straight session Wednesday, with crude prices hitting their lowest levels since September, on prospects for a global trade war that could dent demand and plans by major oil producers to begin unwinding output cuts next month.

Official U.S. data showing a bigger-than-expected weekly rise in domestic crude inventories contributed to oil's decline Wednesday.

Price moves

-- West Texas Intermediate crude CL00 for April delivery CL.1 CLJ25 fell $2.45, or 3.6%, to $65.81 a barrel on the New York Mercantile Exchange after trading as low as $65.72.

-- May Brent crude BRN00 BRNK25, the global benchmark, was down $1.78, or 2.5%, at $69.26 a barrel on ICE Futures Europe after a low of $69.06. Brent and WTI both touched their lowest intraday levels since September, FactSet data show.

-- April gasoline RBJ25 shed 3.8% to $2.1103 a gallon, while April heating oil HOJ25 lost 3.5% to $2.208 a gallon.

-- Natural gas for April delivery NGJ25 traded at $4.32 per million British thermal units, down 0.7%.

Market drivers

The bigger picture for oil "tilts bearish," said Stephen Innes, managing partner at SPI Asset Management. "Supply-side pressures, ranging from rising OPEC production to an uncertain U.S. growth trajectory, could ultimately be the dominant force shaping crude's direction in the weeks ahead."

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, with the exception of a 10% levy on Canadian oil, 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.

"With Trump back in the driver's seat, political urgency is clearly taking precedence over price stability," Innes told MarketWatch.

Meanwhile, with Trump wavering on North American tariffs, "the market is quickly repricing worst-case growth concerns," he said. "The knee-jerk demand fears that had crude getting battered might be a little overdone, and we could see a base-building process take shape if sentiment shifts toward a less chaotic macro backdrop."

After U.S. markets closed Monday, Commerce Secretary Howard Lutnick indicated some tariff relief may be in the offing.

'I'm done trying to front-run Trump's next move. Trading based on his policy pivots is like trying to play 3D chess against an opponent who just flips the board whenever he feels like it.'Stephen Innes, SPI Asset Management

"I'm done trying to front-run Trump's next move," Innes said. "Trading based on his policy pivots is like trying to play 3D chess against an opponent who just flips the board whenever he feels like it."

The Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, have also weighed on prices, announcing earlier this week that they would proceed with plans to begin unwinding production curbs in April. Analysts had widely expected a further delay.

Trump also 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."

Supply data

The U.S. Energy Information Administration released a weekly report Wednesday showing commercial crude inventories climbed by 3.6 million barrels for the week ended Feb. 28.

The data were expected to show a rise of 1.3 million barrels on average, according to analysts surveyed by Platts, part of S&P Global Commodity Insights. Late Tuesday, the American Petroleum Institute reported a crude inventory fall of 1.46 million barrels, according to a source citing the data.

The EIA also reported weekly supply decreases of 1.4 million barrels for gasoline and 1.3 million barrels for distillates. The survey forecast inventory declines of 700,000 barrels for gasoline and 800,000 barrels for distillates.

U.S. oil production was little changed at 13.508 million barrels per day in the latest week, the EIA said, while crude stocks at the Cushing, Okla., Nymex delivery hub rose by 1.1 million barrels to 25.7 million barrels.

Demand for gasoline climbed, with total finished motor gasoline supplied, a proxy for demand, at 8.877 million barrels per day in the latest week, versus 8.454 million bpd from a week earlier.

-Myra P. Saefong -William Watts

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March 05, 2025 10:57 ET (15:57 GMT)

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