Investing.com– Oil prices steadied Wednesday after logging some losses this week on US President Donald Trump’s declaration of a national emergency to ramp up energy production.
At 08:35 ET (13:35 GMT), Brent oil futures slipped 0.1% to $79.22 a barrel, while West Texas Intermediate crude futures fell 0.1% to $75.75 a barrel.
Trump trade policies weigh
Trump declared a national emergency on Monday to greatly increase U.S. energy production- one of his first moves after taking office.
The President signed an executive order outlining the move, which allowed more output from domestic producers, and also scaled back climate change policies enforced by the outgoing Biden administration. Trump also said the U.S. will withdraw from the Paris climate accords.
Traders were also cautious over Trump’s trade policies, after the President raised the prospect of 10% tariffs on China and 25% tariffs on Canada and Mexico.
China was the biggest point of concern for oil markets, given that more economic pressure on the country could further dent its appetite for crude.
“The oil market’s attention is slowly turning away from US sanctions against Russia towards President Trump’s potential trade policy,” said analysts at ING, in a note. “The president has reiterated his threats to impose a 25% tariff on imports from Canada and Mexico, potentially by 1 February. Overnight, he also threatened 10% tariffs on China in retaliation to fentanyl flows from the country.”
“Clearly, trade and tariff risks and the potential for retaliation are growing.”
Russian sanctions, cold weather underpin oil
But crude was sitting on a strong run-up in recent weeks, as stricter US sanctions on Russia’s oil industry still presented the prospect of tighter supplies in the near-term. Oil shipping rates also rose sharply on the move, heralding tighter markets.
The sanctions severely limits Moscow’s ability to distribute crude, and could see buyers in Asia rush to find new sources of oil, or pay higher shipping costs to bring in Russian crude.
Cold weather in the U.S. and Europe is also expected to push up demand for heating oil, while disrupting crude production in parts of the US
But cold weather is also expected to disrupt travel in the two regions.
Traders are now looking to upcoming US inventory data for more cues on supply.
Citi lifts crude prices for 2025
Despite the recent losses. Citi on Wednesday raised its oil price outlook for 2025 due to geopolitical risks centred on Russia and Iran, but noted prices were likely to ease through the second half of the year.
“The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking,” the bank said in a note.
Citi expects Brent crude to average $67 a barrel in 2025, up from a previous forecast of $62. It also said it was lifting its average WTI crude forecast to $63/bbl, without giving its former view.
It added that it was revising up its quarterly Brent forecasts to $75/bbl in the first quarter, $68/bbl in the second, $63/bbl in the third, and $60/bbl in the fourth, also without specifying its previous expectations.
(Ambar Warrick contributed to his article.)
This post is originally published on INVESTING.
