Oil Edges Higher After Weekly Drop as Market Weighs US Tariffs

Bloomberg
10 Feb

(Bloomberg) -- Oil rose after a string of weekly declines as the market weighed the fallout from President Donald Trump’s ongoing tariffs.

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Brent traded near $75 a barrel after a third weekly drop, the longest losing streak since September, while West Texas Intermediate was above $71. Chinese tariffs on US goods are scheduled to start Monday — which are a retaliatory measure against Trump’s levies that took effect last week.

The US president flagged more tariffs on Sunday, this time on aluminum and steel, which would apply to all countries. The duties could ripple through the US energy industry, including oil drillers, which are reliant on specialty steel not made in America. He didn’t specify when the levies would start.

Oil has been on a downward trend since mid-January as a lackluster demand outlook and Trump’s tariffs hurt sentiment, outweighing US sanctions on Russian and Iranian oil. Some market indicators are also flashing weakness, including so-called timespreads, which gauge near-term supply tightness.

Speculators increased their bearish bets against the US oil benchmark by the most since October last week as Trump’s tariff actions whipsawed markets. Net long positions for WTI were lower for a second week, while the corresponding measure for Brent snapped a five-week run of gains. 

“The market has been largely focused on the weaker demand story due to intensifying trade tensions,” said Soni Kumari, a commodity strategist with ANZ Group Holdings Ltd. Still, “Trump’s policies will remain supportive for oil,” she said, in part due to a possible broadening of sanctions on Russia and Iran.

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