In This Article:
(Bloomberg) -- Oil rose after weaker-than-expected US economic growth weighed on the dollar, while investors continued to speculate on the likelihood of tariffs from the Trump administration.
Most Read from Bloomberg
-
Manhattan’s Morning Commute Time Drops With New Congestion Toll
-
US Students’ Reading Scores Drop to Worst in More Than 20 Years
-
Texas HOA Charged With Discrimination for Banning Section 8 Renters
West Texas Intermediate rose about 1% to top $73 a barrel. In the US, data showed the economy ended last year with softer-than-expected growth, supporting projections that the Federal Reserve will cut rates in March. Equities gained and the dollar sank, making commodities priced in the currency more attractive.
The support from the weaker greenback comes as traders parse conflicting signals on Trump’s plans to impose tariffs on major trade partners Canada and Mexico. Howard Lutnick, Trump’s pick for commerce secretary, said the two US neighbors could avoid the curbs if they take action on illegal migration and fentanyl. Previously, officials had indicated that the penalties could kick in this weekend.
Canada exported an average of 4.1 million barrels a day this month to its southern neighbor. The price of Canadian crude has been volatile, with its discount to US oil widening to a six-month low on the tariff threat before recovering after Lutnick’s comments Wednesday. Mexico is the second-largest supplier.
Crude is rebounding after finding support at its 100-day moving average, “along with a nice bid to risk assets,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. The prospect of tariffs will continue to be a major driver in the near-term, and Thursday’s session “feels more like a bounce than conviction buying,” she added.
Oil has had a bumpy start to the year, initially pushing higher as cold weather aided demand and the outgoing Biden administration rolled out a fresh package of sanctions against Russian flows. The early gains have since faded, with Trump pressuring OPEC to lower prices.
Aside from the tariff threat, traders have also been piling into Middle Eastern oil markets as sanctions on Russia spark a rush to purchase barrels from the region. Open interest on the Brent-Dubai spread traded on ICE hit a record this week, underscoring the scale of the activity.
Oil output at Iraq’s giant Rumaila field is still constrained to 900,000 barrels a day following a fire at a tank last week, according to Mohammed Al-Najjar, Iraq’s national representative to OPEC.