Oil Edges Up Amid Geopolitical Uncertainty and Trade War Fears

Oil prices rebounded slightly after reaching their lowest point of the year, as President Trump's geopolitical stance and threats of energy tariffs create market volatility.

Brent Crude Rises, Trade War Concerns Linger

Brent crude futures (BZ=F) traded above $75 after losing 2.1% on Wednesday, erasing year-to-date gains. China's plans to impose retaliatory tariffs on the US have raised concerns about a global trade war that could impact economic growth. Trump's proposal to take control of Gaza has also drawn widespread criticism.

Investors Exit Crude Markets, Supply Concerns Persist

Investors have divested from crude and fuel markets since Trump's inauguration, leading to price declines. However, concerns remain about potential supply disruptions from Iran and Russia, as well as delayed sanctions on Canadian and Mexican crude. Some Middle Eastern oil grades have strengthened, with Saudi Arabia increasing the price of its flagship variety to Asia by its largest margin in over two years.

Trump's Policies Seen as Bearish for Oil

Citigroup analysts believe that President Trump could ultimately be bearish for oil markets. They note that Trump has consistently emphasized lower energy prices as a solution to inflation, interest rates, and other economic issues.

Physical Market Shows Signs of Weakness

There are indications that the physical oil market is softening. The premium for prompt delivery of Brent crude over contracts for the following month has narrowed to its lowest levels this year, below 50 cents per barrel. For West Texas Intermediate, an options bet has been placed for the futures curve to shift into a contango pattern next year, indicating a surplus of supply relative to demand.