MW Oil prices post weekly drop as outline of Trump's tariff plans emerges

By Myra P. Saefong and William Watts

U.S. benchmark crude ends nearly 3% lower for the week

Oil futures ended lower Friday, contributing to a loss for the week, though prices held on to a gain for the month as traders awaited a tariff decision by President Donald Trump on crude imports from Canada and Mexico.

Price moves

-- West Texas Intermediate crude CL00 for March delivery CL.1 CLH25 fell 20 cents, or 0.3%, to settle at $72.53 a barrel on the New York Mercantile Exchange, for a weekly fall of nearly 2.9%. Prices based on the front-month contract climbed 1.1% for January, according to Dow Jones Market Data.

-- March Brent crude BRNH25, the global benchmark, lost 11 cents, or 0.1%, to end at $76.76 a barrel on ICE Futures Europe, for a weekly decline of 2.2%. It finished 2.8% higher for the month. April Brent BRN00 BRNJ25, which become the front month at the end of the session, declined by 22 cents, or 0.3%, to $75.67 a barrel.

-- February gasoline RBG25 edged down by less than 0.1% to $2.04 a gallon, tacking on almost 1.8% for the month, while February heating oil HOG25 added 0.4% to $2.48 a gallon, settling 7.1% higher for the month. The February contracts expired at the end of the session.

-- Natural gas for March delivery NGH25 ended at $3.04 per million British thermal units, down 0.1% for the session, with front-month contract prices losing 16.2% in January.

Market drivers

"There is still significant uncertainty around whether President Trump will include oil in the tariff package, specifically on Canada," Alex Hodes, director of energy-market strategy at StoneX, wrote in Friday's newsletter.

Canada has reportedly threatened that if the tariffs are applied, they will "stop shipments altogether to the U.S. and not pay the tariff," he said. "Both economies will be impacted majorly by the move, so negotiations on a deal will likely be urgent."

On Thursday, Trump reiterated a threat to impose 25% tariffs on imports from Canada and Mexico as early as Saturday. He said a decision on whether to include oil imports would be made Thursday night, but no announcement has so far been made.

When asked about an exemption for oil imports, White House Press Secretary Karoline Leavitt told reporters Friday that she didn't have an update or readout on exemptions, but details would be available for public consumption Saturday.

Read: Trump tariffs to start tomorrow on Canada, Mexico and China. Here's why they may be 'just the warm-up.'

The U.S. imported 4.42 million barrels of oil per day from Canada in 2023, representing 52% of total U.S. oil imports, according to the Energy Information Administration. Mexico comes in at a distant second, representing 11% of U.S. oil imports at 910,000 barrels per day.

Still, Manish Raj, managing director at Velandera Energy Partners, told MarketWatch Friday that if tariffs are applied on Canada, "exporter margins will shrink, but we see no change in their volumes."

He continued: "Canadian tariffs should be a net positive for [the] U.S. Treasury and a neutral for oil markets."

In addition to punitive tariffs on Canada and Mexico, Trump has threatened a raft of other levies on trading partners, including a universal tariff.

Read: Here's how much gas could cost you if Trump's threatened tariffs go through

In the U.S., Baker Hughes Co. $(BKR)$ reported Friday that the number of active domestic rigs drilling for oil climbed by seven to total 479 rigs this week.

Producers are looking to a "more friendly environment" for crude output under Trump, said Phil Flynn, senior market analyst at the Price Futures Group.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, plan to hold a committee meeting online on Monday.

Most analysts seem to believe that OPEC+ will recommend simply rolling existing production cuts, with the "producer group likely to eventually cancel the scheduled April start to adding 138,000 [barrels per day] of oil per month through September of 2026 for a total of 2.2 million bpd," wrote Robert Yawger, director of energy futures at Mizuho Securities USA, in a note Friday.

"I tend to think OPEC+ will add language to any statement that will allow them to save face versus President Trump's call for OPEC to lower prices," he said. Perhaps the members will "confirm the April barrels and give the impression they will not cancel" the production increase for the fourth time.

-Myra P. Saefong -William Watts

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 31, 2025 15:30 ET (20:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.