Americas News
Oil Down Again On Trump Tariff Chaos, But Concerns Also Waning
The fear and loathing created by U.S. president Donald Trump’s tariffs on Canada, Mexico, and China showed no signs of abating on Monday and were said to be the main reason why two key commodities suffered another round of losses, this time slightly over 1 percent.
Brent settled down $1.08, or 1.5 percent, at $69.28 per barrel, while West Texas Intermediate settled down $1.01, also 1.5 percent, at $66.03 per barrel.
John Kilduff, founding partner at Again Capital, said, "This market is on tenterhooks and there's a lot to be processing as we move forward; there are recession talks for the U.S. and it's very concerning for the macro picture."
Still, with Trump getting into a pattern of pushing back the tariff start dates, concern in some circles at least is beginning to soften: Heavy Western Canadian Select for delivery in April traded at $11.70 less per barrel than WTI on Monday, the narrowest discount since November 15.
Also, Trump’s executive order indicates tariffs won’t apply to Canadian oil exported off the Gulf Coast; further, U.S. energy secretary Chris Wright on Monday said an agreement could be reached whereby the tariffs on Canada and Mexico are pulled back completely.
In other oil news on Monday, Jeff Currie, analyst at Carlyle Group Inc., contributed to the on-going debate of when global oil demand will peak by stating in a research note that trade in fossil fuels across borders peaked eight years ago and will decline as nations ramp up investments in renewable and nuclear power.
Currie wrote, “The share of global energy consumption that came from fossil fuels that crossed borders peaked in 2017, and has since declined by 5 percent,” but he added that while countries shift to more localized sources of energy, the U.S.’s energy mix will remain skewed toward fossil fuels given the country’s abundant domestic supply.
Also on Monday, Lorenzo Simonelli, chief executive at Baker Hughes, told media that increased output from U.S. oil and gas producers will likely come from improved efficiencies rather than new drilling and higher spending.
This falls in line with Liam Mallon, upstream president at Exxon Mobil, who last week rejected the idea that pro-oil Trump will inspire producers to increase output; he said, “I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing. ”
