Oil eases as markets take stock of Trump auto tariffs
Oil prices edged lower on Thursday as markets weighed the impact of U.S. President Donald Trump's auto tariffs at a time when concerns swirled about global supply due to U.S. tariff threats on buyers of Venezuelan oil and sanctions on Iran's oil clients.
Brent crude futures fell 22 cents, or 0.3%, to $73.57 a barrel by 0733 GMT. U.S. West Texas Intermediate crude futures slipped 23 cents, or 0.3%, to $69.42. Both benchmarks were initially up in early Asian trade.
On Wednesday, oil prices rose by around 1% on government data showing U.S. crude oil and fuel inventories fell last week, and on the U.S. threat of tariffs on nations buying Venezuelan crude.
"The recent (price) uptrend seems to be factoring in the noise around tariffs for buyers of Venezuelan oil. We have maintained that Trump's policies on Iran and Venezuela present the biggest upside risk for oil prices, so that is kind of partially playing out currently," said DBS Bank's energy sector team lead Suvro Sarkar.
India's Reliance Industries, operator of the world's biggest refining complex, will halt Venezuelan oil imports following the tariff announcement, sources said on Wednesday.
Sarkar said, however, DBS does not see prices returning to the higher levels seen in early 2025 as demand concerns stemming from "U.S. policy uncertainty and tariff wars will come back to haunt the market at some point again".
Concerns about an OPEC+ supply hike in May may weigh on the market slightly, some analysts said.
From a technical analysis standpoint, the key price resistance to watch on WTI will be between $73.50 and $74.00 per barrel, and the 200-day moving average, where the bullish pressure may pause given that OPEC+ is still looking to hike output in May, said OANDA senior market analyst Kelvin Wong.
China's Purchasing Managers' Index data is likely to take center stage to exert some influence on oil prices in the next week, he added.
Traders and investors were also assessing the impact on oil demand from Trump's latest announcement of a 25% tariff on imported cars and light trucks from next week. The view was that it could drive auto prices up, potentially impacting demand for oil, but also slow down the switch to greener cars.
"The news around Trump's tariffs on autos may actually turn out to be a net positive for crude oil because the rise in new car prices from tariffs will mean it slows down the switch to newer, more fuel-efficient models," said Tony Sycamore, a market analyst at IG.
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