Oil prices have risen, buoyed by a weaker US dollar, as markets monitor President Donald Trump’s threats to impose higher tariffs on European nations. The move is linked to Trump’s desire to purchase Greenland, which has sparked concerns over a potential trade war.
Brent futures increased by 15 cents, or 0.2%, to $64.09 a barrel, while the US West Texas Intermediate crude contract for February rose 14 cents, or 0.2%, to $59.58. The more actively-traded WTI March contract gained 6 cents, or 0.1%, to $59.40. This comes after WTI contracts did not settle on Monday due to the US Martin Luther King Jr. Day holiday.
A weaker US dollar has provided some support to oil and the broader commodities complex, according to an ING commodities strategist. This is because a weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies. Despite the re-emergence of trade tensions between the US and Europe, prices have held up relatively well.
Over the weekend, Trump threatened to impose additional 10% levies from February 1 on goods imported from several European countries, including Denmark, Norway, and Sweden, rising to 25% on June 1 if no deal on Greenland is reached. The oil market has found some support from better-than-expected fourth-quarter Chinese gross domestic product data, which showed the country’s economy grew 5.0% last year.
China’s refinery throughput and crude oil output have also increased, rising 4.1% and 1.5% year-over-year, respectively. Both were at all-time highs, according to government data released on Monday. The country’s strategy to capture a record share of global demand for goods has helped offset weak domestic consumption, but this approach is becoming increasingly difficult to sustain.
Markets are also watching developments in Venezuela’s oil sector, after Trump said the US would run the industry following the capture of President Nicolas Maduro. Vitol has offered Venezuelan oil to Chinese buyers at discounts of about $5 per barrel to ICE Brent for April delivery, according to multiple trade sources. As the situation continues to unfold, investors will be closely monitoring the impact on global oil prices and the broader commodities market.
