Crude oil futures sank more than 2 per cent on Thursday morning after the US President Donald Trump announced a base tariff of 10 per cent on imports from all trading partners.
At 9.54 am on Thursday, June Brent oil futures were at $73.28, down by 2.23 per cent, and May crude oil futures on WTI (West Texas Intermediate) were at $70.01, down by 2.37 per cent. April crude oil futures were trading at ₹6,012 on Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹6,147, down by 2.20 per cent, and May futures were trading at ₹5,993 against the previous close of ₹6,124, down by 2.14 per cent.
Trump’s announcement to impose steep tariffs on imports from several countries has led to concerns in the market over the possible escalation in trade disputes. This could impact the demand for energy commodities in the global market.
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In their Commodities Feed for Thursday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices were under pressure on Thursday morning after the Trump administration unveiled a base tariff of 10 per cent on all imports from all trading partners.
Trump’s latest levies will come into effect on April 5. An additional tariff will be implemented on some trading partners, effective April 9. They said the reciprocal tariff on China is 34 per cent, while the EU faces 20 per cent. Meanwhile, Canada and Mexico are exempt from these latest tariffs. Oil and natural gas also appear to be exempt.
They said the scale of some of Trump’s tariffs will raise global demand concerns. There is also increased uncertainty, with markets waiting to see how trading partners retaliate, they added.
The latest crude oil inventory data released by the US EIA (Energy Information Administration) did not support the market. EIA’s petroleum status report for the week ending March 28 showed that US commercial crude oil inventories increased by 6.2 million barrels from the previous week. Market was expecting a decline of around 2.1 million barrels during the period.
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Total motor gasoline inventories decreased by 1.6 million barrels from last week and were 2 per cent above the five-year average for this time of year. Finished gasoline inventories increased and blending components inventories decreased last week. Distillate fuel inventories increased by 0.3 million barrels last week and were about 6 per cent below the five-year average for this time of year.
Total products supplied in the US over the last four-week period averaged 20.1 million barrels a day, down by 1.2 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.8 million barrels a day, down by 1.9 per cent from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels a day over the past four weeks, up by 3.7 per cent from the same period last year. Jet fuel product supplied was up 4.2 per cent compared with the same four-week period last year.
ING Think’s Commodities Feed said that OPEC+ is holding a call on Thursday to discuss the need for members to stick to production targets. OPEC+ is set to bring an additional 138,000 barrels a day of supply back to the market this month, part of plans to start gradually unwinding 2.2 million barrels a day of supply cuts. “We may also get clarity on whether the group will continue to unwind supply cuts next month. Yet even as OPEC+ brings supply back to the market, some members need to make compensation cuts for previous overproduction. This should more than offset the planned supply increases,” the Commodities Feed said.
April natural gas futures were trading at ₹343.60 on MCX during the initial hour of trading on Thursday against the previous close of ₹347.80, down by 1.21 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April jeera contracts were trading at ₹23,300 in the initial hour of trading on Thursday against the previous close of ₹22,960, up by 1.48 per cent.
April kapas futures were trading at ₹1,458 on NCDEX in the initial hour of trading on Thursday against the previous close of ₹1,472, down by 0.98 per cent.