Oil eases to one-week low amid Trump tariff uncertainty

By Scott DiSavino

(Reuters) -Oil prices eased to a fresh one-week low on Wednesday as the market considers how U.S. President Donald Trump's proposed tariffs could affect global economic growth and demand for energy.

Brent futures fell 29 cents, or 0.4%, to settle at $79.00 a barrel, while U.S. West Texas Intermediate crude (WTI) traded 39 cents, or 0.5%, lower to settle at $75.44.

That puts Brent down for a fifth day in a row for the first time since September and WTI down for a fourth day in a row for the first time since November. Both crude benchmarks closed at their lowest since Jan. 9 for a second day in a row.

"Possible sanctions under the new Trump administration remain unclear, with possible tariffs related to Canada and Mexico now seemingly at the forefront of trader uncertainties," analysts at energy advisory firm Ritterbusch and Associates said in a note.

Trump said his administration was discussing imposing a 10% tariff on goods imported from China on Feb. 1, the same day that he previously said Mexico and Canada could face levies of around 25%.

He also vowed duties on European imports, without providing further detail and threatened new tariffs against Russia if the country does not make a deal to end its war in Ukraine.

"The oil market's attention is slowly turning away from U.S. sanctions against Russia towards President Trump's potential trade policy," said ING analysts, adding that the energy complex has come under pressure with the growing threat of tariffs.

In Europe, French President Emmanuel Macron and German Chancellor Olaf Scholz sought to project unity at a meeting in Paris, as Europe struggles to respond with one voice to threats of tariffs from the United States.

The U.S. president also said his administration would "probably" stop buying oil from Venezuela, a member of the Organization of the Petroleum Exporting Countries under U.S. sanctions.

The U.S. imported about 200,000 barrels per day (bpd) of oil from Venezuela during the first 10 months of 2024, up from an average of 100,000 bpd in 2023, according to the latest data from the U.S. Energy Information Administration (EIA).

Iran, another OPEC member under U.S. sanctions, delivered a conciliatory message to Western leaders in Davos on Wednesday, with a top official denying it wants nuclear weapons and offering talks about opportunities.

In other OPEC news, Saudi Arabia's crude oil exports in November jumped to their highest in eight months.

US CRUDE DRAWDOWN SEEN EXTENDING

Analysts projected U.S. crude stockpiles fell about 1.6 million barrels last week, ahead of data due from the American Petroleum Institute (API) trade group later on Wednesday and the U.S. Energy Information Administration on Thursday. [EIA/S] [API/S]

Both weekly reports were delayed by a day due to the U.S. Martin Luther King Jr. Day holiday on Monday.

If correct, that would be the first time energy firms pulled oil out of storage for nine weeks in a row since January 2018 when they withdrew oil for a record 10 consecutive weeks. That compares with a decrease of 9.2 million barrels in the same week last year and an average 800,000-barrel drawdown over the past five years (2020-2024).

Separately, several Texas ports began to resume operations on Wednesday after Winter Storm Enzo disrupted energy and shipping operations earlier this week.