Oil prices drop despite U.S. tariff concerns

January 29, 2025 (MLN): Oil prices slid on Wednesday, giving up some of last session's gains, as an increase in U.S. crude stockpiles and easing worries over Libyan supplies weighed on prices, although the decline was limited by potential U.S. tariffs on Canadian and Mexican imports.

Brent crude futures decreased by $0.10, or 0.13%, to $77.39 per barrel.

West Texas Intermediate (WTI) crude futures fell by $0.04, or 0.05%, to $73.73 per barrel by [12:00 pm] PST. 

"While markets are tackling demand-side pressures, easing backdrop on the supply side is equally weighing over oil prices," said Priyanka Sachdeva, senior market analyst at Phillip Nova in Singapore.

"Markets are under pressure with Trump's plans to boost U.S. oil production and await further clarity on Trump's energy policies."

U.S. President Donald Trump began his term last week by issuing several executive orders to ease the permitting of energy infrastructure and boost already record-high oil and gas output, as Reuters reported.

U.S. crude oil and gasoline stocks rose last week, while distillate inventories fell, market sources said on Tuesday, citing American Petroleum Institute figures.

The Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, is due to release its weekly data at 1530 GMT on Wednesday.

The resolution of supply concerns in Libya has also added to selling pressure, said Chiyoki Chen, chief analyst at Sunward Trading in Tokyo.

Those fears eased after the state-run National Oil Corp said on Tuesday that export activity was running normally after it held talks with protesters demanding a halt of loadings at one of its main oil ports.

The White House said on Tuesday that President Trump still plans to issue 25% tariffs on Canada and Mexico on Saturday.

It remains unclear how any new tariffs could affect oil imports to the U.S. from the countries.

Canada supplied 3.9 million barrels per day of oil to the U.S. in 2023, roughly half of overall imports for the year, while Mexico supplied 733,000 bpd, according to data from the EIA.

Saudi Arabia's energy minister and several of his OPEC+ counterparts have held talks following Trump's call for lower oil prices.

This comes ahead of a meeting next week of OPEC+ oil-producing countries, according to official statements and sources.

Oil benchmarks fell to multi-week lows early this week as news of surging interest in Chinese startup DeepSeek's low-cost artificial intelligence (AI) model prompted concerns over energy demand to power data centers.

Additionally, weak economic data from China further soured the demand outlook, rattling the overall energy sector.

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