Americas News
Oil Rises, Speculation Hits Overdrive As Trump Delays Canadian Tariff
U.S. president Donald Trump on Friday stating that he will likely lower his tariff against Canada's oil to 10 percent as well as delay its implementation to February 18 instead of this weekend caused a second consecutive session of meagre gains for crude.
In aftermarket trading, Brent settled up 54 cents to $76.54 per barrel, while West Texas Intermediate settled up 73 cents to $73.48 per barrel; for the week, the Brent and WTI benchmarks had settled 2.1 percent and 2.9 percent lower, respectively.
Following Trump's statement, heavy Western Canadian Select crude for delivery in the second quarter traded at about $15.30 per barrel less than WTI
John Kilduff, founding partner at Again Capital, said of Friday's trading, "It's uncertainty that is starting to push prices up."
The uncertainty extended to what will happen on Monday when the Organization of the Petroleum Exporting Countries (OPEC) meets to discuss output: Trump has urged the cartel to lower prices, but OPEC delegates told media they are unlikely to change plans to raise output gradually.
Meanwhile, Goldman Sachs Group Inc. analysts stated in a note that U.S. tariffs against Canada and Mexico "would likely initially raise gasoline prices in the U.S. Midwest, and eventually weigh on crude prices globally (via weaker demand) and especially in Canada, where producers have limited export options."
Carl Weinberg, founder of High Frequency Economics, told CNBC, "We've got about a trillion dollars' worth of trade in round numbers worth of [U.S.] imports from Mexico and Canada combined; 25 percent of $1 trillion is $250 billion, and that is roughly what is going to come out of the U.S. economy to pay these tariffs."
He added that while this will be a plus for bringing down the deficit, "It's going to impact in February and March this quarter, and then in all the months of the next quarter….we're going to get a hit of about six-tenths of a percent off of GDP growth in the first quarter, and then another tenth of a percent in the second quarter."
Yet another pundit weighing in on the possible ramifications of Trump's tariffs was Melanie Jolie, Canadian Foreign Minister: she stated, "We ship oil at a discount which is, ultimately, refined in Texas; if it's not us, it is Venezuela……there's no other option on the table, and this administration doesn't want to work with Venezuela."
