Oil steadies after multi-day plunge but traders wary of tariff, supply impacts

Oil prices steadied on Thursday after falling over the past four sessions as U.S. tariffs on Canadian crude supply may be eased but investors remain wary of remaining tariffs on Mexico and major producers’ plans to increase output.

Brent futures were trading up 42 cents, or 0.61%, at $69.72 a barrel by 0144 GMT, while U.S. West Texas Intermediate crude (WTI) were up 40 cents, or 0.6%, to $66.71 a barrel.

Brent plunged 6.5% in the previous four sessions, dropping to its lowest since December 2021 on Wednesday, while WTI fell 5.8% over the same period to its lowest since May 2023. Prices fell after the U.S. enacted tariffs on Canadian and Mexican trade, including energy imports, at the same time major producers decided to raise output quotas for the first time since 2022.

The decline eased as the U.S. said it will exempt automakers from the 25% tariffs, raising optimism the impact of the trade dispute may be mitigated.

Additionally, a source familiar with the discussions said that U.S. President Donald Trump may eliminate the 10% tariff on Canadian energy imports, such as crude oil and gasoline, that comply with existing trade agreements.

“Trump’s trade measures are threatening to reduce global energy demand and disrupt trade flows in the global oil market. This was exacerbated by a rise in U.S. inventory,” Daniel Hynes, senior commodity strategist at ANZ said in a note on Thursday. Market sentiment remains bearish from the double impact of the tariffs and the decision by OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia to raise output.

Crude stockpiles in the U.S., the world’s biggest oil consumer, rose more than expected last week amid seasonal refinery maintenance, while gasoline and distillate inventories fell due to a hike in exports, the Energy Information Administration said on Wednesday.

Crude inventories rose by 3.6 million barrels to 433.8 million barrels in the week, the EIA said, far exceeding analysts’ expectations in a Reuters poll for a 341,000-barrel rise.

There are further signs of weakness in American oil demand, with U.S. waterborne crude oil imports dropping to a four-year low in February, driven by a fall in Canadian barrels shipped to the East Coast, according to ship tracking data, as refinery maintenance, including a long turnaround at the largest plant in the region, quashed demand.

Tariffs also remain in effect on U.S. imports of Mexican crude, a smaller supply stream than Canadian crude but an important one for U.S. refineries on the Gulf Coast.