Oil ticks up after hours on possibility of lower US tariff on Canadian oil
FILE PHOTO: A pump is seen at a gas station in Manhattan, New York City, U.S., August 11, 2022. REUTERS/Andrew Kelly/File Photo
HOUSTON :Oil prices rose in aftermarket trading on Friday as U.S. President Donald Trump said he expects his administration to decrease proposed tariffs on Canadian oil from 25 per cent to 10 per cent, and to impose duties on oil and gas around Feb. 18, later than initially feared.
U.S. West Texas Intermediate crude rose 73 cents, or 1 per cent, to $73.48 a barrel after closing down 20 cents, or 0.3 per cent, at $72.53.
Brent crude futures for April rose 54 cents, or 0.7 per cent, to $76.54 a barrel in extended trading after settling 22 cents lower on Friday. The March contract, which expired on Friday, had settled down 11 cents at $76.76 a barrel.
For the week, the Brent and WTI benchmarks had settled 2.1 per cent and 2.9 per cent lower, respectively, and marked the second straight week of losses as the markets expect the proposed tariffs would drive up fuel prices for Americans and hit global economic growth and demand for energy.
"We're going to put tariffs on oil and gas," Trump told reporters in the White House's Oval Office. "That'll happen fairly soon, I think around the 18th of February."
Asked if tomorrow's tariffs would be inclusive of Canadian crude, Trump said: "I'm probably going to reduce the tariff a little bit on that. We think we're going to bring it down to 10 per cent for the oil."
Trump had previously threatened a 25 per cent tariff on Canadian and Mexican exports to the United States on Feb. 1 and had not clarified if oil and gas would be exempt.
"It's uncertainty that is starting to push prices up," said John Kilduff, a partner at Again Capital in New York.
The Trump administration is doubling down and there is more potential for retaliatory measures from Canada and/or Mexico, and also the potential for escalation of these tariffs, he added.
Canada and Mexico are the two largest crude oil exporters to the United States. Canadian crude in particular is used by many U.S. Midwest refineries and a curtailed flow will likely push up fuel prices, analysts have said.
Tariffs would likely result in large U.S. 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 United States imposes tariffs, Prime Minister Justin Trudeau said on Friday, warning Canadians that they could be facing tough times.
The market is also awaiting an 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 OPEC and its de facto leader, Saudi Arabia, to lower prices.
Meanwhile, the U.S. oil rig count, an indicator of future production, rose by seven to 479 this week.
Money managers cut their net long U.S. crude futures and options positions in the week to Jan. 28, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
