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The oil market is quiet in early morning trading today, after settling lower for a second consecutive week last week. News that the Trump administration is offering tariff exemptions on certain electronics products initially supported risk assets. Since then, uncertainty returned as President Trump suggested exemptions are only temporary — and that other more specific tariffs could be introduced in due course. Meanwhile, market participants are digesting the implications of indirect weekend talks between the US and Iran, which were described as constructive. Further talks are planned. This may help remove some of the sanction risk affecting the oil market, particularly if talks keep on moving in the right direction, ING’s commodity analysts Warren Patterson and Ewa Manthey note.
Speculators slash Brent longs amid tariff uncertainty
“Unsurprisingly, the latest positioning data shows that speculators reduced net longs in ICE Brent significantly over the last reporting week. Speculators sold 162,344 lots, leaving them with a net long of 155,838 lots as of last Tuesday. This was driven predominantly by longs liquidating. There also was also a small portion of new shorts entering the market. This marks the largest amount of speculative selling in a single week since at least 2015 — and by quite a distance.”
“Already, the weakness in the oil market appears to be causing a pullback in drilling activity in the US. The latest data from Baker Hughes shows that the US oil rig count fell by 9 last week, leaving it at 480. That’s the largest weekly decline since June 2023. Current West Texas Intermediate (WTI) prices leave little incentive for US producers to drill. Prices remaining near current levels could result in further declines in drilling activity.”
“On the data front, China will release its first batch of trade data for March today, including crude oil imports and trade in refined products. OPEC will also release its latest monthly oil market report today. The group has been slower to adjust its demand growth estimates. It will be interesting to see if recent tariff developments prompt OPEC to revise demand estimates lower.”
