Crude oil futures traded flat on Wednesday after the US President, Donald Trump, hinted at imposing a 10 per cent tariff on China.
At 9.58 am on Wednesday, March Brent oil futures were at $79.36, up by 0.09 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $75.84, up by 0.01 per cent.
February crude oil futures were trading at ₹6577 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6564, up by 0.20 per cent, and March futures were trading at ₹6540 against the previous close of ₹6513, up by 0.41 per cent.
On Tuesday, Trump said that his team was discussing a 10 per cent tariff on China from February 1. He attributed the export of fentanyl from China to Mexico and Canada as the reason for this.
Meanwhile, the Chinese Vice Premier, Ding Xuexiang, who addressed the World Economic Forum, said that there are no winners in a trade war. He stressed the need for greater international economic cooperation.
China is one of the major consumers of crude oil in the world market. Market players opine that such moves by the US could impact the demand for commodities such as crude oil in that country.
Trump had earlier said that he is planning to impose 25 per cent tariffs on imports from Canada and Mexico with effect from February 1.
In their Commodities Feed for Wednesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said the oil market’s attention is slowly turning away from US sanctions against Russia towards Trump’s potential trade policy, which saw Brent crude settle below $80 a barrel on Tuesday.
Trump has reiterated his threats to impose a 25 per cent tariff on imports from Canada and Mexico, potentially by 1 February. Overnight, he also threatened 10 per cent tariffs on China in retaliation to fentanyl flows from the country, which has kept some pressure on oil prices in early morning trading in Asia on Wednesday, they said, adding, trade and tariff risks and the potential for retaliation are growing.
Meanwhile, the US crude oil production was impacted by a winter storm across the US Gulf Coast on Tuesday. Market reports said North Dakota’s oil production declined by 130,000 to 160,000 barrels per day due to the winter storm.
January menthaoil futures were trading at ₹918.50 on MCX during the initial hour of trading on Wednesday against the previous close of ₹924, down by 0.60 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), February castorssed contracts were trading at ₹6479 in the initial hour of trading on Wednesday against the previous close of ₹6467, up by 0.19 per cent.
February cottonseed oilcake futures were trading at ₹2770 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹2764, up by 0.22 per cent.
