Oil prices eased on Friday (Jan 31) and closed the week lower as investors awaited 25 per cent tariffs by the US on Canada and Mexico, expected on Saturday.
Brent crude futures for March, which expire on Friday, settled down 11 cents at US$76.76 a barrel. The more actively traded second month futures were down 31 cents, at US$75.58.
US West Texas Intermediate crude closed down 20 cents, or 0.3 per cent, at US$72.53.
For the week, the Brent and WTI benchmarks lost 2.1 per cent and 2.9 per cent, respectively, and marked the second straight week of losses.
Trump will include a process for Canada and Mexico to seek specific exemptions for certain imports, sources had told Reuters, adding that new tariffs would become effective on Mar 1.
But the White House said Saturday’s deadline holds and that there was no update on exemptions for certain imports.
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Crude futures continue to drift as traders await the outcome of Trump’s tariff threats, said Dennis Kissler, senior vice-president of trading at BOK Financial.
Canadian crude is used by many US Midwest refineries and a curtailed flow will likely support fuel prices, he added.
Canada and Mexico are the two largest crude oil exporters to the US, but it is unclear if oil would be included among the tariffs. Trump said on Thursday he would soon decide whether to exclude oil imports from the tariffs.
Tariffs would likely result in large US refinery run cuts, said Energy Aspects analyst Livia Gallarati.
“Our base case has been that, if tariffs are announced, they will include a grace period for negotiations and that oil is likely eventually to be carved out from any tariffs,” Gallarati added.
Canada will respond immediately and forcefully if the US imposes tariffs, Prime Minister Justin Trudeau said on Friday, warning Canadians that they could be facing tough times.
The market is also awaiting the Opec+ meeting scheduled for Monday.
Opec+ is unlikely to alter plans to raise output gradually when it meets on Monday, delegates from the producer group told Reuters, despite Trump urging the Organization of the Petroleum Exporting Countries and its de facto leader, Saudi Arabia, to lower prices.
Meanwhile, the US oil rig count, an indicator of future production, rose by seven to 479 this week. REUTERS
