Feb 07, 2025 (MarketLine via COMTEX) --
There was an overall decrease in crude oil prices during the week amid uncertainty over the global economic outlook after the US and China reignited their tariff war. After the US imposed 10% tariffs on imports from China, the country retaliated with tariffs ranging from 10-15% on various US goods, including energy commodities. The US had also levied tariffs on Canadian and Mexican imports last week but those were paused for the time being. Prices were also weighed down by large weekly crude inventory build in the US due to faltering gasoline demand in the domestic market. However, the slide in prices was somewhat restricted due to expectations of disruption in crude supplies from Russia and Iran. While Russian crude oil exports had already received new sanctions from Europe and the US last month, the latter followed it up with a fresh set of sanctions on Iran this week to curtail its exports. A monthly rise in the US manufacturing output also helped limit the downside to prices during the week.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices declined on Monday, after the US imposed 10% tariffs on energy imports from Canada and 25% tariffs on most other products from Canada and Mexico. The country also announced tariffs of 10% for goods imported from China. It raised the possibility of a slowdown in trade among these major markets that could put a dent on global energy consumption. Prices were also weighed down by signs of rising US crude output after drillers added seven oil rigs during the week ending on January 31, 2025.Oil prices rose on Tuesday, supported by an uptick in the factory activity in the US, which could give a fillip to energy demand in the country. As per the Institute for Supply Management (ISM), the Purchasing Manager’s Index (PMI) for US manufacturing rose to 50.9 in January 2025, indicating expansion in the sector. A month earlier, this PMI was in the contraction range below the benchmark of 50.0, at 49.3. Prices also received support from expectations that the US might levy more stringent sanctions on Iran to completely halt its crude oil exports, potentially lowering the crude availability in global markets. A government official indicated that they were likely to apply similar policies as during Trump’s previous term to ensure that the Iran’s revenue sources were drastically curtailed. Besides, the US granted a temporary pause on its proposed tariffs on Canada and Mexico while the countries worked to address enforcement issues at the border crossings to prevent the movement of illegal people and products.Oil prices fell on Wednesday, weighed down by renewed concerns over a US-China trade war after the latter announced tariffs on commodities imported from the US, including crude oil, LNG and coal. These new tariffs from China are set to come into effect from February 10, 2025. Prices also came under pressure from a spike in the weekly crude stockpiles in the US. According to the US Energy Information Administration (EIA), crude inventory in the country rose by 8.7 million barrels for the week ending on January 31, 2025. The country’s gasoline inventory also rose by 2.2 million barrels during the same week, indicating week demand from the transportations sector amid cold weather conditions across the country.Oil prices dipped further on Thursday, weighed down by worries over a potential glut in global crude oil supply after the US President Trump reiterated his desire to see more output getting generated from his country. This push is largely aimed at lowering the commodity prices to ease the inflationary pressures on consumers in the country. Prices were also weighed down by worries over the outlook for trade between the US and China – the world’s top two markets – after both countries decided to impose sanctions on each other’s goods.Oil prices rose on Friday, supported by anticipation of reduced crude supplies from Iran. This was after the US imposed new sanctions on entities that were allegedly involved in moving Iranian crude oil to ports in China. As per an analysis by the French bank Societe Generale, these latest sanctions on individual entities as well as tankers could reduce Iran’s crude oil exports to half of the current levels. However, the upside to prices was somewhat curtailed by a slight increase in the US rig count over the past week. As per the Baker Hughes, the number of oil rigs in the country grew by one while gas-directed rigs rose by two units during the week ending on February 7, 2025.
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COMTEX_462961049/2227/2025-02-20T09:38:22
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