What’s happening: Crude oil settled lower on Friday and ended the week in the red.
What happened: Despite the weekly loss, oil prices gained in January, as investors awaited US President Donald Trump’s decision on tariffs on crude imports from Canada and Mexico.
Although oil prices trended lower on Friday, they climbed during the extended trading hours on Friday on Trump’s comments on tariffs on Canadian oil.
Why it matters: On Thursday, President Donald Trump reiterated his plans to impose a 25% tariff on imports from Canada and Mexico.
When asked about the inclusion of Canadian crude in his tariff plans, Trump said, “We think we’re going to bring it down to 10% for the oil.”
Markets are still uncertain about whether Trump will include oil in his tariff list. Meanwhile, Canada threatened to completely halt oil shipments to the US in case tariffs are levied.
The US imported around 4.42 million barrels of oil per day from Canada in 2023, accounting for 52% of America’s oil imports, according to data released by the EIA (Energy Information Administration). Imports from Mexico represents around 11% of US oil imports.
Meanwhile, data released on Friday by the US Baker Hughes showed the number of active domestic rigs drilling for oil rose by 7 to 479 rigs in the latest week.
WTI crude for March delivery declined 20 cents, or 0.3%, to close at $72.53 a barrel on the NYMEX (New York Mercantile Exchange), recording a weekly loss of around 2.9%. However, prices gained 1.1% for the month. Oil prices jumped around 1.5% in after-hours trading on Friday.
March Brent crude declined 11 cents, or 0.1%, to settle at $76.76 a barrel on ICE Futures Europe, falling 2.2% last week. The global benchmark recorded a 2.8% gain for January.
In other energy trading, February gasoline declined by almost 0.1% to $2.04 a gallon but gained around 1.8% for the month. February heating oil rose 0.4% to $2.48 a gallon, recording a monthly gain of 7.1%. Natural gas for March delivery slipped 0.1% to $3.04 per million British thermal units, with prices falling sharply by 16.2% in January.
What to watch: Investors await the online meeting of the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) on Monday. The cartel is scheduled to discuss plans to increase production gradually amid Trump urging to lower prices.
Context: The EUR/USD forex pair fell this morning as investors monitored the ECB’s interest rate outlook.
Details: Headline inflation in Germany and France came in better than market expectations. Easing price pressures reinforced prospects of the European Central Bank announcing further interest rate cuts in 2025.
Germany’s annual consumer price inflation fell to 2.3% in January, from 2.6% in the previous month. The figure also came in better than market estimates of 2.6%. France’s annual inflation rate rose to 1.4% in January, from 1.3% in the previous month, but was below expectations of 1.5%.
On Thursday, the European Central Bank slashed interest rates as expected and suggested more rate cuts ahead.
Strength in the US dollar weighed on the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 1.3% to 109.74 on Monday.
The EUR/USD pair fell 1.3% to 1.0224 this morning, while the EUR/GBP pair slipped 0.3% to 0.8338. The STOXX Europe 600 Index gained 0.13% to settle at 539.53 on Friday.
What to watch: Investors await the release of economic data on Eurozone’s HCOB manufacturing PMI (1300 UAE Time) and inflation rate (1400 UAE Time) today.
The HCOB Flash Eurozone manufacturing PMI is expected to increase to 46.1 in January, from 45.1 in the previous month. The annual inflation rate in the Eurozone, which accelerated for a third consecutive month to 2.4% in December, is projected to rise further to 2.5% in January.
Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.75%, 0.50% and 0.14%, respectively.
Russia launched multiple drone and missile attacks on Ukraine, killing around 15 persons. The news sent the safe-haven US dollar index higher in forex trading this morning.
Taiwan’s consumer confidence index declined to 72.54 in January, from 74.61 in the previous month. The latest reading being the lowest since May 2024 exerted pressure on the TWD/USD forex pair.
China’s Caixin general manufacturing PMI slipped to 50.1 in January, from December’s reading of 50.5. The figure also came below market estimates of 50.5 and sent the CNY/USD pair lower in forex trading this morning.
Australia’s retail sales declined by 0.1% in December. This being the first contraction in nine months exerted pressure on the AUD/USD forex pair.
Philippines’ S&P Global manufacturing PMI declined to 52.3 in January, from 54.3 in the previous month, sending the PHP/USD pair lower in forex trading this morning.
Spain’s tourist arrivals (1200 UAE Time) and HCOB manufacturing PMI (1215 UAE Time), Italy’s HCOB manufacturing PMI (1245 UAE Time) and inflation rate (1400 UAE Time), France’s HCOB manufacturing PMI (1250 UAE Time), Germany’s HCOB manufacturing PMI (1255 UAE Time), South Africa’s ABSA manufacturing PMI (1300 UAE Time), UK’s S&P Global manufacturing PMI (1300 UAE Time), Mexico’s foreign exchange reserves (1400 UAE Time), Brazil’s S&P Global manufacturing PMI (1700 UAE Time), Singapore’s SIPMM manufacturing PMI (1700 UAE Time), Canada’s S&P Global manufacturing PMI (1830 UAE Time), as well as US S&P Global manufacturing PMI (1845 UAE Time), ISM manufacturing PMI (1900 UAE Time) and construction spending (1900 UAE Time).