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ANS tests upper $70s
Oil and gas imports exempted from US tariffs announced April 2
Steve Sutherlin Petroleum News
Alaska North Slope crude continued its run in the upper $70s April 2 despite moving 55 cents lower to close at $76.26 per barrel. West Texas Intermediate gained 51 cents on the day to close at $71.71 and Brent gained 46 cents to close at $74.95.
WTI and Brent turned sharply lower in Asian trading after the close, however, directly following the conclusion of an afternoon April 2 press conference at the White House called by President Donald Trump to announce a new slate of tariffs on imported goods, to be imposed on a host of U.S. trading partners.
Later in the day, Reuters reported that imports of oil, gas and refined products were exempted from the new tariffs, based on a White House source.
The trade protections do not apply to energy imports from Canada or Mexico -- which are already exempted under the United States-Mexico-Canada Agreement free trade deal -- nor do they apply to energy imports from any other country, a White House official said, according to the report.
Trump told reporters at the press conference that the tariffs being announced that day did not apply to Canada and Mexico, without specifying any special treatment for U.S. energy imports.
As Petroleum News went to press, the prices of WTI and Brent were reversing some earlier April 3 Asia trade losses, but the benchmarks were still in the red.
ANS came into April 2 at an elevated price, jumping earlier in the week after Trump threatened Russia with an expansion of oil sanctions as Russia balked in the peace process for its war on Ukraine. Trump also notified Iran that the United States would take military action against Iran if it didn't come to the table to negotiate an agreement on nuclear weapons.
ANS fell 52 cents April 1 to close at $76.81, as WTI shed 28 cents to close at $71.20 and Brent shed 25 cents to close at $74.49.
March 31 gains were robust, as the escalated risk premium drove ANS $2.15 higher to close at $77.33, while WTI jumped $2.12 to close at $71.48 and Brent gained $1.11 to close at $74.74.
The risk premium supported prices, even on April 2 after the U.S. Energy Information Administration reported a massive build in commercial crude inventories in its Weekly Petroleum Status Report.
U.S. inventories for the week ended March 28 -- excluding the Strategic Petroleum Reserve -- increased by 6.2 million barrels from the previous week to 439.8 million barrels, 4% below the five-year average for the time of year, the EIA said.
Total motor gasoline inventories fell by 1.6 million barrels for the period to 237.6 million barrels -- 2% above the five-year average for the time of year, the EIA said. Distillate fuel inventories increased by 0.3 million barrels to 114.6 million barrels -- 6% below the five-year average for the season.
On March 28, ANS fell 77 cents to close at $75.18, while WTI fell 56 cents to close at $69.36 and Brent fell 40 cents to close at $73.63.
ANS added 23 cents to close at $75.75 March 27, as WTI added 27 cents to close at $69.92 and Brent added 24 cents to close at $74.03.
From Wednesday to Wednesday, ANS gained 54 cents from its March 26 close of $75.72, to $76.26 April 4.
Oil prices may pull back, but then rise Oil prices may pull back beginning April 2 as some investors bet that tariffs will hurt the economy and hit energy demand, according to Stephen Innes, managing partner at SPI Asset Management.
Much of the recent crude rally "hasn't been driven by booming fundamentals," Innes told MarketWatch for a March 31 report.
For now, "it's geopolitical noise pricing in worst-case outcomes," however the supply-side narrative offers some justification for strength in prices, he said.
"Venezuela's in the crosshairs this week, and while their barrels don't swing global supply, the headline risk is enough to keep hedgers busy and (commodity trading advisors) twitchy. The real question is: Who's next?" said Innes. "If that crude disappears, either by sanctions bite or back-channel reroutes, it only tightens an already edgy market.
"Stack Venezuela pressure on top of Iran's restrictions and Canada's headaches, and it's a classic supply squeeze without needing a demand boom to ignite the rally," he said.
The Organization of the Petroleum Exporting Countries and its allies may step in, but "let's not pretend they'll open the spigots without a serious price incentive," Innes said.
Oil traders shouldn't look to U.S. shale to fill the gap, Innes said. Exploration and production companies are "laser-focused on capital returns, not crude patriotism."
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