Oil prices settle higher on Thursday, finding support a day after President Donald Trump said he was revoking a license issued by the Biden. The administration that had allowed Chevron Corp. to produce oil in Venezuela.
Prices remained lower week to date. However, with U.S. tariffs on Canada and Mexico are expected to come into effect next week. Potentially hurting the outlook for the economy and for energy demand.
Trump’s reversal of the license allowing Chevron to operate in Venezuela could halt the company’s ability to export Venezuelan crude. It will be tightening global oil supplies, said George Pavel, general manager at trading platform Naga.com Middle East, in emailed commentary. WTI and Brent settled Wednesday at their lowest marks since Dec. 10, with recent pressure tied to worries that proposed tariffs by the Trump administration will undercut global growth. Prices for both WTI and Brent crude remained lower for the week and month to date.
Expectations for the future have taken a “meaningful dive,” reinforcing a growing concern that policy uncertainty, particularly related to tariffs and the Federal Reserve, is “bleeding into both consumer and business sentiment,” said Stephen Innes, managing partner at SPI Asset Management. “That’s a slow-burning macro headwind that could snowball into real economic weakness down the line.”
Latest U.S Data Why Oil prices settle higher
U.S. data this week showed an index of consumer confidence dropped 7 points in February to an eight-month low of 98.3.
“Tariffs and their broader impact on North American markets are at the forefront,”. Innes told MarketWatch. “Trump’s looming tariff threats against Canada and Mexico in March. It will be followed by planned broad duties in April, are turning up the heat on global trade tensions.”
At the same time, lower bond yields amid escalating trade tensions suggest markets are “bracing for a slowdown, not a surge in inflation,” Innes said.
Then there’s the “geopolitical wild card,” with the U.S. potentially gaining a significant stake in Ukraine’s mineral rights, he said. “There’s every reason to believe Washington will want to monetize those assets. That means pushing the Ukraine-Russia peace plan forward and ultimately pulling back on Russian sanctions, bringing more [oil] barrels back to market.”
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Source: Market Watch
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