Oil Swings To The Upside Despite Trump Tariffs, Analysts Now Bullish About Prospects

Increased industrial activity and mobility are cited as factors driving demand: File Image/Pixabay

People “buying into the dip” was the only explanation offered for a near-2 percent rise in oil prices on Monday, after suffering a 2.8 percent weekly loss on Friday and despite ongoing fears that U.S. president Donald Trump may be starting a multi-front trade war.

After Washington announced that Trump would sign 25 percent steel and aluminum tariffs (which analysts have warned would kindle trade wars and ruin demand), Brent settled up $1.21, or 1.6 percent, at $75.87 per barrel, while West Texas Intermediate settled up $1.32, or 1.9 percent, to $72.32.

Harry Tchilinguiran, analyst at Onyx Capital, said, "It's tariff uncertainty which is the name of the game….this affects risk appetite in general and has spillover effects into oil.

"After last week's declines, some people may be buying into the dip."

Also supporting prices on Monday was Russia's Federal Antimonopoly Service, which may initiate  a one-month ban on gasoline exports by large producers in order to stabilize wholesale prices ahead of the crop-sowing season.

Dennis Kissler, senior vice president of trading at BOK Financial, remarked, "Tighter supplies of exported Russian crude and gasoline have Middle East cash crude prices moving higher in the early trade today.”

Monday also revealed Singapore-based investment management practice ELD Asset Management to be in a bullish mood regarding oil: it expects energy prices to rise notably in the first 6 months of this year, with crude being the likely standout.

ELD said increased industrial activity and mobility are fuelling higher energy demand, and that ongoing coordination among members of the Organization of the Petroleum Exporting Countries (OPEC) intended to manage oil supply will support prices by striking a balance between production levels and global demand that favours producers.

Bloomberg too was upbeat about oil’s immediate prospects: the news agency pointed out that “There are signs of tightness in some corners of the market, notably in the Middle East, where the broader curtailment of competing flows has meant that producers in the region have been able to raise prices for their main Asian customers.

“In Europe, soaring natural gas prices has made it more cost-effective to burn oil, which could potentially lead to a demand boost.”