Trump Fixation Leads To Repeat Trading Outcome, More Losses To Come

The uncertainty over U.S. policy is causing a major shift in trading trajectory: File Image/Pixabay

Oil trading on Wednesday was a replay of the previous two sessions, with analysts fixated on U.S. president Donald Trump to the exclusion of almost everything else going on in the world, and two key benchmarks incurring more losses.

Brent settled down 29 cents to $79.00 per barrel, while West Texas Intermediate settled down 39 cents at $75.44.

The main focus of all things Trump on Wednesday was a proposed 10 percent tariff on China and the European Union in addition to his long-threatened tariffs against Canada and Mexico, and considering he stated in the previous session that he probably wouldn't enact some of these tariffs until February (if at all, since political pundits have observed that this is more of a bargaining chip), the analytical hand-wringing could dominate trading for quite some time.

Understating the case, ING stated in a note that, "The oil market's attention is slowly turning away from U.S. sanctions against Russia towards President Trump's potential trade policy."

As for the actual performance of crude so far this year, Razan Hilal, a market analyst at Forex.com., said, "Oil's 2025 uptrend reflects unsustainable bullish momentum, primarily fueled by transient factors: winter demand, a short-term Chinese export boost ahead of U.S. tariff risks and hedging against upside risks driven by U.S. sanctions on Russian oil."

Bloomberg added, "The recent run of declines has been limited by WTI's 200-day moving average, which is serving as a floor for losses."

But sure to keep the bearish momentum going was a late disclosure on Wednesday from the American Petroleum Institute, which estimated that crude inventories in the U.S. increased by 1 million barrels for the week ending January 17, compared to expectations for a 1.6 million draw.

Last week saw a 2.6 million barrel crude draw, but product inventories have been building for multiple weeks now.

In other oil related news on Wednesday, Khalifa Abdulsadek, oil and gas minister for Libya, said his country is planning to boost its crude refining capacity from the current 300,000 barrels per day (bpd) to 400,000 bpd, and he for one was not concerned about waning demand.

He said, "To maximize exports, you need to keep an eye on the local demand first, as it is increasing for power generation."