Oil prices climbed in early trade on Tuesday as investors seized the opportunity to cover short positions following the previous day’s losses. However, concerns lingered over economic headwinds stemming from tariffs and U.S. monetary policy, which could dampen fuel demand.
Brent crude futures and WTI rise
Brent crude futures rose by 51 cents, or 0.8 percent, reaching $66.77 a barrel at 00:45 GMT. Simultaneously, U.S. West Texas Intermediate (WTI) crude also gained 51 cents, or 0.8 percent, to settle at $63.59 a barrel. Both benchmarks had dropped more than 2 percent on Monday, influenced by signs of progress in nuclear deal talks between the U.S. and Iran, which eased supply concerns.
“Some short-covering emerged after Monday’s sharp sell-off,” as reported by Reuers, citing Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities. “However, concerns about a potential recession driven by the tariff war persist,” he added, predicting that WTI will likely trade within the $55–$65 range for the foreseeable future amid ongoing uncertainty related to tariffs.
Economic concerns and U.S. monetary policy
On Monday, U.S. President Donald Trump reiterated his criticism of Federal Reserve Chair Jerome Powell, warning that the U.S. economy could slow unless interest rates were lowered immediately. His comments regarding Powell fueled worries about the Fed’s independence in setting monetary policy and raised concerns about the outlook for U.S. assets. Consequently, major U.S. stock indexes dropped, and the dollar index slid to a three-year low on Monday.
“The growing uncertainty surrounding U.S. monetary policy is expected to negatively impact financial markets and the broader economy, raising fears that it could lead to a decline in crude oil demand,” Kikukawa remarked.
Read more: Oil prices fall to $66.86 as tariff concerns, economic uncertainty grow
Investor sentiment on tariff policy
A Reuters poll conducted on April 17 indicated that investors believe the tariff policy will trigger a significant slowdown in the U.S. economy this year and next. The median probability of a recession occurring within the next 12 months is approaching 50 percent, a notable concern given that the U.S. is the world’s largest oil consumer.
Russia adjusts Brent crude price forecast
Meanwhile, Russia’s economy ministry has revised its forecast for the average price of Brent crude in 2025, cutting it by nearly 17 percent from previous estimates made in September, according to documents obtained by Reuters.
U.S. oil and gasoline stockpiles expected to decline
U.S. crude oil and gasoline stockpiles were expected to have fallen last week, while distillate inventories likely experienced an increase. This information comes from a preliminary Reuters poll conducted on Monday, ahead of the weekly reports from the American Petroleum Institute and the Energy Information Administration.
