Tokyo — Oil prices rose on Thursday after a US court blocked most of President Donald Trump's tariffs from taking effect, while the market was watching out for potential new US sanctions curbing Russian crude flows and an Opec+ decision on hiking output in July.
Brent crude futures climbed 78c, or 1.2%, to $65.68 a barrel. US West Texas Intermediate (WTI) crude advanced by 78c, or 1.3%, to $62.62 a barrel at 4.05am GMT.
A US trade court on Wednesday ruled that Trump overstepped his authority by imposing across-the-board duties on imports from US trading partners. The court was not asked to address some industry-specific tariffs Trump has issued on cars, steel and aluminium using a different statute.
The ruling buoyed risk appetite across global markets, which have been on edge about the effect of the levies on economic growth, but analysts said the relief may only be temporary given the Trump administration has said it would appeal.
“But for now, investors get a breather from the economic uncertainty they love to loathe,” said Matt Simpson, an analyst at City Index in Brisbane.
On the oil supply front, there are concerns about potential new sanctions on Russian crude. At the same time, oil cartel Opec and allies, together called Opec+, could agree on Saturday to accelerate oil production hikes in July.
“We’re assuming the group will agree on another large supply increase of 411,000 barrels a day [bbl/day]. We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share,” said ING analysts in a note.
Adding to supply risks, Chevron has terminated its oil production and a number of other activities in Venezuela, after its key licence was revoked by the Trump administration in March.
Venezuela in April cancelled cargoes scheduled to Chevron citing payment uncertainties related to US sanctions. Chevron was exporting 290,000bbl/day of Venezuelan oil or over a third of the country’s total before that.
“From May through August, the data points to a constructive, bullish bias with liquids demand set to outpace supply,” Mukesh Sahdev, Global Head of Commodity Markets at Rystad Energy, said in a note, as he expects demand growth outpacing supply growth by 600,000bbl/day-700,000bbl/day.
Later on Thursday, investors will be watching for the weekly reports from the American Petroleum Institute (API) and the Energy Information Administration, the statistical arm of the US department of energy.
According to the market sources familiar with the API data, US crude and petrol stocks fell last week while distillate inventories rose.
Meanwhile, a wildfire in the Canadian province of Alberta has prompted the temporary shutdown of some oil and gas production which could reduce supply, and forced residents of a small town to evacuate.
Reuters
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