Oil prices steadied on Thursday as traders absorbed hawkish signals from the Federal Reserve, while U.S. President Donald Trump reaffirmed his intentions to boost domestic energy production.
Oil prices nursing losses after Trump’s call for lower prices
Oil prices were feeling the effects of losses over the previous week following Trump’s call for reduced oil prices and increased output in the U.S. and other major suppliers. Data indicating a larger-than-expected increase in U.S. oil inventories also impacted crude prices negatively.
Market skittishness over trade tariff plans
Market sentiment remained largely anxious regarding Trump’s proposals to implement additional trade tariffs on significant global economies, particularly China. The White House reiterated on Wednesday that he plans to commence imposing tariffs starting February 1.
Brent and WTI futures show slight gains
Brent oil futures, set to expire in March, rose by 0.2 percent to $76.71 a barrel, while West Texas Intermediate crude futures climbed 0.3 percent to $72.81 a barrel by 20:29 ET (01:29 GMT).
Read more: Oil prices stabilize at $77.47 amid U.S. inventory data and Trump tariff concerns
Trump tariffs, energy policy in focus
On Wednesday, Trump asserted that the Fed had failed to address the “problem they created with inflation,” claiming he would alleviate price pressures by “unleashing American energy production,” among other strategies. His comments echoed his ongoing calls for increased U.S. energy output, following the 47th President’s declaration of an energy emergency last week and his request for more domestic production while relaxing climate-related restrictions on the sector.
Calls for OPEC to increase output
Additionally, Trump urged the Organization of Petroleum Exporting Countries to boost production and lower oil prices. His objective of reducing oil prices appears to be part of Trump’s broader agenda to combat U.S. inflation.
Market reaction to Trump’s energy output plans
Oil markets had responded unfavorably to Trump’s proposals for increased output, although analysts did not predict an imminent rise in production under his leadership.
Concerns over trade tariffs with Canada and Mexico
Trump’s trade tariff plans also remained a significant concern, particularly as the White House reaffirmed that he will impose 25 percent tariffs on Canada and Mexico and a 10 percent duty on China starting this Saturday.
Further economic challenges in China pose risks to global oil demand, given that the nation is the largest oil importer worldwide.
Markets digest hawkish Fed outlook
Market sentiment was additionally affected by hawkish signals from the Fed, which opted to keep interest rates steady on Wednesday, as anticipated. However, the central bank appeared to adopt a hawkish stance regarding future easing, with Fed Chair Jerome Powell indicating little intention to reduce interest rates in the near term due to persistent inflation and a strong labor market.
Dollar strength pressures oil prices
Uncertainty surrounding Trump’s policies was also seen as a factor influencing the Fed’s uncertain outlook. The dollar strengthened slightly following the Fed’s decision, putting additional pressure on oil prices.
