Onome Amuge
Oil prices traded flat on Wednesday, as market participants scrutinized President Donald Trump’s proposed tariffs and his declaration of a national energy emergency on his first day in office, endeavoring to gauge their potential implications for the oil market.
Brent crude futures, the global benchmark for oil prices, displayed marginal gains of four cents, or 0.05 percent, settling at $79.33 per barrel, with traders cautious in their approach to the oil market.
U.S. West Texas Intermediate (WTI) crude futures, on the other hand, dipped slightly by two cents, or 0.03 percent, to settle at $75.81
Pepperstone's Research Strategist, Dilin Wu, observed that oil traders were poised to closely track additional information concerning energy production and trade agreements, as they attempt to assess the intricate relationship between economic growth, energy security, and policy risks.
Following his first day in office, President Trump indicated that his administration was considering the imposition of a 10 percent tariff on all imported Chinese goods from February 1.
The U.S president's statements came hot on the heels of his earlier pledge to impose duties of approximately 25 percent on imports from Mexico and Canada.
As the oil market pivots its focus away from the prolonged issue of U.S. sanctions against Russia, ING analysts remarked that the potential implications of President Trump’s trade policy are coming into sharper focus for market participants.
Trump, in his first week address, indicated that his administration was highly likely to cease oil imports from Venezuela, a key supplier of crude oil to the U.S., setting the stage for a possible shift in the country's energy sourcing.
Beyond this,he proposed an ambitious plan to enhance domestic oil and gas production, encompassing initiatives such as the declaration of a national energy emergency, the loosening of environmental safeguards, and the U.S.’s withdrawal from the Paris climate accord.
Trump’s policy approach, despite its potential long-term impact, is not likely to prompt immediate investment in the U.S. energy sector or alter the trajectory of oil production growth, according to the analysis provided by Morgan Stanley analysts in their recent note.
However, the analysts further noted that Trump’s proposed measures could stave off a potential decline in the demand for refined products.