Oil Prices Rebound from 3-Year Low on Tariff Exemption

Oil Prices Rebound from 3-Year Low on Tariff Exemption

Oil prices rebounded slightly on Thursday in the global commodities market after hitting a 3-year low as the U.S. eased tensions with tariff exemptions on cars from Canada and Mexico under mutual agreement.

Brent crude increased by 0.47%, trading at $69.65 per barrel, up from $69.32 at the close of the previous session. The US benchmark West Texas Intermediate increased by 0.48%, settling at $66.54 per barrel, compared to its prior session close of $66.22.

Sentiment remains negative in the oil market, with ICE Brent falling close to 2.5% yesterday. It settled below US$70 per barrel after briefly trading to its lowest level in three years. Rising OPEC supply and prospects for further increases, combined with ever-present tariff uncertainty, pushed the market lower, ING says in a note.

According to commodities strategists at ING, recent price weakness makes it difficult for US producers to “drill, baby, drill.”  Producers need, on average, a $64 per barrel price level to drill a new well profitably, according to the Dallas Federal Reserve Energy Survey. 

The US Energy Information Administration (EIA) reported that US crude oil inventories increased by 3.61 million barrels over the last week.  That represents a marked increase from the 1.5 million barrel decline the American Petroleum Institute (API) reported the previous day.

Also, crude oil stocks at Cushing rose by 1.12 million barrels. This leaves stocks at the WTI delivery hub at the highest level since November.

ING says lower refinery rates contributed to the build, with utilisation rates falling by 0.6 percentage point and crude inputs dropping by 346k b/d week on week. Among refined products, gasoline and distillate inventories fell by 1.43 million barrels and 1.32 million barrels, respectively.

With growing concerns over oil demand and supply, the barrel price of Brent oil hit its lowest level since December 2021 on Wednesday.

US stockpile on the rise, and OPEC+ plans to increase production in April will keep exerting pressures in the global commodities market.

The US administration, which began a 25% tariff on goods imported from Canada and Mexico, announced that a one-month exemption will be granted to cars coming to the country under the US-Mexico-Canada Agreement (USMCA). Oil Prices Rise as U.S Revokes Venezuela Agreement