The oil market is under pressure in early morning trading today, amid a broader risk-off move. President Trump has threatened to impose a 10% tariff on several European countries that oppose his plans for Greenland. These tariffs will begin on February 1 and rise to 25% on June 1, until an agreement is reached for the United States to take over Greenland, noted ING commodities experts Ewa Manthey and Warren Patterson.
Fixed prices weaken, and Brent crude spreads remain constant
“Reports indicate that the EU is on the verge of halting the EU-US trade deal and possibly reviving a €93 billion tariff package on US goods. There is also a push from France for the EU to use its anti-coercion tool against the US. This would restrict US access to the EU single market. There is likely to be a lot of noise this week about these developments, especially as world and business leaders meet at the World Economic Forum in Davos.”
“Despite the pressure on the fixed price, the Brent spot spread remains flat, indicating some tightness in the physical spot market. If expectations of a large surplus hold true, we should see spreads come under pressure, along with fixed price weakness.”
“The latest positioning data shows that speculators increased their net long positions in Brent crude by 85,496 contracts during the final week of the report to 208,461 contracts as of last Tuesday. This is the largest position held since September. The move was mostly driven by new buying amid growing concerns about supplies from Iran, given recent protests in the country and the potential for US intervention. Although these concerns have subsided in recent days.”
