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Oil Swings as Traders Eye Ukraine Talks, Tariffs, China Stimulus - BLOOMBERG
BY Jack Wittels and Nicholas Lua
(Bloomberg) -- Oil fluctuated in a choppy session as traders assessed the outlook for the war in Ukraine, US tariffs and Chinese stimulus.
Brent swung near $73 a barrel, after posting its biggest monthly loss since September. Europe is racing to craft a plan for Ukraine following the clash between presidents Volodymyr Zelenskiy and Donald Trump on Friday, with the future of sanctions on Russian crude still uncertain.
At the same time, the US is on the verge of slapping tariffs on Canada and Mexico — its top foreign oil suppliers — and of doubling a levy on China. While the penalties against its neighbors may raise costs for refineries, trade wars have the potential of slowing the economy.
Meanwhile, as Beijing braces for the impact of measures from Washington, traders will be monitoring China’s major parliamentary conclave on Wednesday for any new government support.
“Crude remains stuck near lows amid fears a global trade war may negatively impact demand, at a time when supply is ample and OPEC+ considers when to start tapering production cuts,” Saxo Bank said in a report.
The impact from potential levies and sanctions is complex. Last year, US refiners bought about 4.76 million barrels a day of crude from Canada, Mexico and Venezuela — which risks losing Chevron. At the same time, charges on other goods pose a broader risk to economic growth, consumer confidence and energy consumption.
Hedge funds have cut their net-long position in West Texas Intermediate crude to the lowest level since 2010. In another bearish signal, China’s combined consumption of gasoline, diesel and kerosene will fall to 382 million tons this year, according to CNPC.
