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Markets await new US tariffs

Markets await new US tariffs

The oil prices were stable in a thinly traded session on Wednesday, after dropping in the previous trading session. This was due to concerns that new U.S. Tariffs, which are set to be announced at 2000 GMT on Thursday, could deepen a trade war globally and limit crude demand.

Brent futures rose 1 cent to $74.50 per barrel at 0346 GMT, after falling 0.4% on the previous day. U.S. West Texas Intermediate Crude Futures gained 3 cents to reach $71.23 following a 0.4% drop. Prices reached their highest level in five weeks Monday.

The White House confirmed Tuesday that President Donald Trump would impose new trade barriers on Wednesday. However, it did not provide any details on the size or scope of these trade barriers.

Oil prices have been stable since March as the markets wait for clarity about Trump's plans to implement universal tariffs ahead of "Liberation Day". The low trading volumes on the oil market show that there are growing concerns over these tariffs despite positive demand signals coming from mainland China, said Phillip Nova's Senior Market Analyst Priyanka Sahdeva.

At 0353 GMT on the LSEG platform, ICE data showed that Brent trading volumes for June were 8,550 lots, compared to 672,617 open interest lots for the same period.

Trump has been promoting April 2 as "Liberation Day" for weeks. This would mean new duties which could shake up the global trading system.

The White House will make an announcement at 4 pm. ET (2000 GMT).

"The (tariff) announcement could impact prices either to the upside or the down, although the balance of risk lies to the downside, given that weaker-than-expected tariff measures are unlikely to drive a significant rally in Brent, while stronger-than-expected measures could trigger a substantial selloff," BMI analysts said in a note.

Trump's threats to impose secondary duties on Russian oil and his Monday escalation of sanctions against Iran as part of the "maximum-pressure" campaign by his administration to reduce its exports offset any declines.

Janiv Shah, vice president for commodity markets at Rystad Energy, said that if tariffs were successful in enabling a ceasefire between Russia and Ukraine, these punitive actions could be short lived. Tariffs would likely have a positive impact on crude oil, but a negative effect on products.

"Oil prices are still low, and we're waiting for an official response from the major importers on the new tariffs."

The U.S. fuel and oil inventories paint a mixed picture of supply and demand for the world's largest producer and consumer.

According to sources citing the American Petroleum Institute, crude oil stocks in the United States increased by 6 million barrels during the week ending March 28. The sources reported that gasoline inventories fell by 1.6m barrels while distillate stocks dropped by 11,000 barrels.

The Energy Information Administration is expected to release official crude oil inventories in the United States later today. Reporting by Laila K. Kearney and Trixie Yap, both in New York; editing by Christian Schmollinger & Muralikumar A. Anantharaman

(source: Reuters)