Oil Prices Drop as Trump Pressures OPEC for Reductions
By Nicole Jao
NEW YORK (Reuters) -Oil fell 1% on Thursday after U.S. President Donald Trump urged Saudi Arabia and OPEC to bring down its cost during his address at the World Economic Forum.
Uncertainty over how Trump's proposed tariffs and energy policies would affect global economic growth and energy demand also weighed on prices.
Brent crude futures settled 71 cents, or 0.9%, lower at $78.29 a barrel. U.S. West Texas Intermediate crude (WTI) settled down 82 cents, or 1.09%, to $74.62.
Prices dipped after Trump announced he would ask Saudi Arabia and OPEC to bring down the cost of oil during his speech at the World Economic Forum in Davos, Switzerland.
"Trump's call for lower oil prices will naturally be welcomed by consumers and businesses but received warily by the U.S. oil industry and other global suppliers," said Clay Seigle, senior fellow for energy security at the Center for Strategic and International Studies.
The energy industry has been calling for increased investments in global oil and gas projects, but bringing down oil prices could raise concerns about the economics of new projects, he added.
U.S. crude oil stockpiles slipped to their lowest level since March 2022 last week even as refining activity slowed, the Energy Information Administration (EIA) said on Thursday. But the drawdown was smaller than analysts had expected. Distillate inventories also declined, while gasoline inventories rose, the EIA said.
The broader economic implications of U.S. tariffs could further dampen global oil demand growth, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
Trump has said he would add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war in Ukraine.
He also vowed to hit the European Union with tariffs and impose 25% tariffs on Canada and Mexico. On China, Trump said his administration was discussing a 10% punitive duty because fentanyl is being sent from there to the U.S.
On Monday he declared a national energy emergency intended to provide him with the authority to reduce environmental restrictions on energy infrastructure and projects and ease permitting for new transmission and pipeline infrastructure.
There will be "more potential downward choppy movement in the oil market in the near term due to the Trump administration's lack of clarity on trade tariffs policy and impending higher oil supplies from the U.S.", OANDA senior market analyst Kelvin Wong said in an email.
(Reporting by Nicole Jao, Paul Carsten, Emily Chow and Trixie Yap. Editing by Mark Potter and Nick Zieminski)
