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OIL: Tariff Threats Continue to Impact Oil Prices (UPDATED)

OIL
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  • The threat of tariffs on Canadian oil imports saw a short term spike in oil prices in Thursday’s US trading session.
  • President Trump was quoted saying “We don’t need the products that Canada have. We have all the oil that you need. We have all the trees you need,” Trump remarked before indicating that a decision will be made Thursday evening on the timeframe for the application of tariffs. (as per BBG)
  • The risk is (at present) that markets become dismissive of tariff threats and ignore them, running the risk that they materialize.
  • US currently imports approximately 4 million barrels of oil a day from Canada for refining, with several refineries business models set up for almost exclusive supply of Canadian ‘sour’ crudes.
  • This saw Valero Energy Corp announce that it expects (should the tariffs be applied this Saturday as indicated) that refiners will be forced to cut production, potentially putting upward pressure on prices, rather the lower prices as Trump wants.
  • There is evidence to suggest that oil flow throw the Baltic Sea port of Ust-Luga in Russia appear to be impaired or even halted following drone attacks by Ukraine.
  • The port exports upward of 650,000 barrels per day, or as much as 20% of Russia’s seaborne exports.
  • WTI finished higher for the day, but there was significant intra-day volatility.
  • Opening at US$73, WTI traded down to $72.02, spiking to $73.84 before closing ahead at $72.73.
  • Brent opened at US$76.77, trading down to a low of $76, reaching a high of $77.63 before closing at $77.10.
  • The day ahead will be driven by tariff headline watching, should decisions be forthcoming from the White House on tariffs for Canada.
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  • The threat of tariffs on Canadian oil imports saw a short term spike in oil prices in Thursday’s US trading session.
  • President Trump was quoted saying “We don’t need the products that Canada have. We have all the oil that you need. We have all the trees you need,” Trump remarked before indicating that a decision will be made Thursday evening on the timeframe for the application of tariffs. (as per BBG)
  • The risk is (at present) that markets become dismissive of tariff threats and ignore them, running the risk that they materialize.
  • US currently imports approximately 4 million barrels of oil a day from Canada for refining, with several refineries business models set up for almost exclusive supply of Canadian ‘sour’ crudes.
  • This saw Valero Energy Corp announce that it expects (should the tariffs be applied this Saturday as indicated) that refiners will be forced to cut production, potentially putting upward pressure on prices, rather the lower prices as Trump wants.
  • There is evidence to suggest that oil flow throw the Baltic Sea port of Ust-Luga in Russia appear to be impaired or even halted following drone attacks by Ukraine.
  • The port exports upward of 650,000 barrels per day, or as much as 20% of Russia’s seaborne exports.
  • WTI finished higher for the day, but there was significant intra-day volatility.
  • Opening at US$73, WTI traded down to $72.02, spiking to $73.84 before closing ahead at $72.73.
  • Brent opened at US$76.77, trading down to a low of $76, reaching a high of $77.63 before closing at $77.10.
  • The day ahead will be driven by tariff headline watching, should decisions be forthcoming from the White House on tariffs for Canada.