Photo caption: Oil
Oil prices dipped on Wednesday extending the previous session’s declines as markets weighed U.S. President Donald Trump’s declaration of a national energy emergency on his first day in office and eyed his tariff policies.
According to Reuters report, Brent crude futures fell 36 cents, or 0.5%, to $78.93 per barrel at 0730 GMT. U.S. West Texas Intermediate crude futures dropped 46 cents, or 0.6%, at $75.37.
The contracts settled lower on Tuesday after Trump laid out a sweeping plan to maximise oil and gas production, including declaring a national energy emergency to speed permitting, rolling back environmental protections, and withdrawing the U.S. from the Paris climate pact.
“Market participants are trying to digest the mixed signals that Trump 2.0 bring for the trajectory for oil prices,” said Yeap Jun Rong, market strategist at IG.
“Near-term focus will be on whether his aim to fill up the U.S. strategic reserves materialises,” said Yeap.
Trump’s latest energy policy is unlikely to spur near-term investment or change U.S. production growth, analysts at Morgan Stanley wrote in a note, adding that it could, however, moderate potential erosion of refined product demand.
Analysts also questioned if Trump’s promise to refill the strategic reserve would make any changes to oil demand as the Biden administration was already purchasing oil for the emergency stockpile.
Meanwhile, investors were cautious as Trump said he was thinking of imposing 25% tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.
“The oil market’s attention is slowly turning away from U.S. sanctions against Russia towards President Trump’s potential trade policy,” said ING analysts on Wednesday, adding that the energy complex has come under pressure with the growing threat of tariffs.
The U.S. president had said his administration would “probably” stop buying oil from Venezuela, among the top suppliers of oil to the country.
Meanwhile, a rare winter storm churned across the U.S. Gulf Coast on Tuesday.
North Dakota’s oil production was estimated to be down by between 130,000 and 160,000 barrels per day (bpd) due to extreme cold weather and related operational challenges, the state’s pipeline authority said on Tuesday.
The impact of the storm on oil and gas operations remained limited in Texas, with minimum interruptions in gas flows, few power outages and plenty of gasoline inventories at the pump, as many roads and highways remained closed.
