The oil market is experiencing heightened volatility as traders react to the latest developments in trade policy under the new Trump administration. The potential inclusion of Canadian oil in the recently announced tariffs is a significant concern, as it could disrupt the supply of crude to the United States, which imports an average of 4 million barrels per day from Canada. This disruption could lead to reduced volumes reaching the Cushing storage hub and impact Midwest refiners, thereby influencing WTI crude prices.
The market is divided on the broader implications of these tariffs. On one hand, they are seen as bearish for global trade flows and oil consumption, particularly if they extend to China, Canada, and Mexico. On the other hand, tariffs could drive inflationary pressures, prompting investors to turn to oil as a hedge against inflation. This duality is contributing to the erratic price movements observed in the market, with traders bracing for continued volatility.
As of 10:47 on January 31, WTI crude is trading at $72.75, slightly above its last close of $72.73. The market remains on edge, with prices fluctuating between an intraday high of $73.49 and a low of $71.94, reflecting the ongoing uncertainty surrounding trade policies and their potential impact on oil supply and demand dynamics.