Oil Dips Below $73 on Hope of Tariff Relief
Oil prices fell below $73 a barrel after Donald Trump's nominee for commerce secretary suggested tariffs on Canada and Mexico may not be implemented.
At a Senate confirmation hearing, Howard Lutnick stated that the US's largest trading partners could avoid tariffs if they address illegal immigration and fentanyl trafficking.
Earlier expectations of weekend tariffs had boosted oil futures and narrowed the discount for Canadian crude to its lowest in six months.
"Oil prices remain volatile due to uncertainty over Trump's tariffs, with a focus on Canada's tariffs coming into effect on Saturday," noted Ole Hansen of Saxo Bank. The recent decline reflects "negative sentiment within a generally range-bound market."
Oil prices surged in early 2025 due to US sanctions against Russia, but trade concerns and weak Chinese economic data have eroded those gains.
Trump's policy agenda could further impact markets, with the president urging OPEC+ to reduce oil prices. The cartel will reportedly discuss Trump's plans to increase US production at a meeting on February 3.
Traders will also monitor today's Federal Reserve meeting for signals from Jerome Powell on inflation trends.