Oil prices steadied on Wednesday as investors weighed the impact of potential U.S. tariffs on Canadian and Mexican imports, while largely shrugging off an increase in U.S. weekly crude inventory.
Brent crude futures fell 2 cents to $77.47 a barrel by 0132 GMT while U.S. crude futures were at $73.81 a barrel, up 4 cents, or 0.1%.
Benchmarks fell to multi-week lows early this week as news of surging interest in Chinese startup DeepSeek’s low-cost artificial intelligence (AI) model prompted concerns over energy demand to power data centres, rattling the overall energy sector, while weak economic data from China further soured the demand outlook.
The White House said on Tuesday that U.S. President Donald Trump still plans to issue 25% tariffs on Canada and Mexico on Saturday while weighing fresh tariffs on China.
Trump did not immediately impose tariffs on Monday as previously promised but said he was thinking about imposing 25% duties on imports from Canada and Mexico on Feb. 1 over illegal immigrants and fentanyl crossing into the U.S.
It remains unclear how any new tariffs could affect oil imports to the U.S. from the countries. Canada supplied 3.9 million barrels per day of oil to the U.S. in 2023, roughly half of overall imports for the year, while Mexico supplied 733,000 bpd, according to data from the Energy Information Administration (EIA).
“Investors are trying to assess the impact of Trump’s tariff policy,” said Yuki Takashima, economist at Nomura Securities, noting that if tariffs are imposed, the U.S. energy market could face immediate disruptions, but also experience falling demand later due to higher energy prices and declining consumption.
“Some traders also adjusted positions in response to the turbulence in financial markets caused by the DeepSeek shock,” Takashima said.
Technology stocks regained ground on Tuesday, a day after the DeepSeek rattled markets.
The crude market showed little reaction to U.S. weekly data. Crude oil and gasoline stocks rose last week, while distillate inventories fell, market sources said, citing American Petroleum Institute figures on Tuesday.
The EIA, the statistical arm of the U.S. Department of Energy, is due to release its weekly data at 1530 GMT on Wednesday.
In the Middle East, fears of supply disruption in Libya eased after the country’s state-run National Oil Corp said export activity was running normally after it held talks with protesters.
Saudi Arabia’s energy minister and several of his OPEC+ counterparts have held talks following Trump’s call for lower oil prices and ahead of a meeting next week of OPEC+ oil-producing countries, according to official statements and sources.
(Reporting by Yuka Obayashi; Editing by Christian Schmollinger)