Oil prices finished with daily gains on Friday (Feb 7) after new sanctions were imposed on Iran’s crude exports, but prices were down for the week as investors worried about US President Donald Trump’s renewed trade war on China and threats of tariffs on other countries.
Brent crude futures settled at US$74.66 a barrel, up US$0.37, or 0.5 per cent and poised to fall more than 2 per cent this week. US West Texas Intermediate (WTI) crude finished at US$71 a barrel, up US$0.39, or 0.6 per cent.
Reports of planned tariffs from the Trump administration reined in gains following the sanctions announced on Thursday, said John Kilduff, partner at Again Capital.
“We’re just trying to make our way through the sanctions/non-sanctions, tariff talk from the White House,” Kilduff said.
WTI has been left close to US$70 a barrel, which seems to be the bottom of the trading range, Kilduff said.
“I don’t know if oil prices are low enough for the president, but we’ll see,” he said.
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Traders were watching statements by Trump throughout Friday for possible changes in US policies that could reshape the market quickly, said Phil Flynn, senior analyst at Price Futures Group.
“Trump giveth and Trump taketh away,” Flynn said.
The US Treasury said on Thursday it was imposing new sanctions on a few individuals and tankers helping to ship millions of barrels of Iranian crude oil per year to China, in an incremental move to increase pressure on Teheran.
“The imposition of tariffs and the pauses should be bullish for the oil market because it adds uncertainty, said Michael Haigh, global head of commodities research at Societe Generale. But you haven’t seen this response because of demand concerns. Tariffs and tit for tat responses from nations, it hurts global gross domestic demand… and oil demand.”
Trump has announced a 10 per cent tariff on Chinese imports as part of a broad plan to improve the US trade balance, but suspended plans to impose steep tariffs on Mexico and Canada.
“Downside pressure has stemmed from the news flow around tariffs, with concerns over a potential trade war fuelling fears of weakening oil demand,” analysts at BMI said in a note on Friday.
Oil prices settled lower on Thursday after Trump repeated a pledge to raise US oil production, unnerving traders a day after the country reported a much bigger than anticipated jump in crude inventories. REUTERS
