West Texas Intermediate (WTI) crude prices continued to decline for a second straight session, trading around $72.20 a barrel during early European hours on Thursday (1/30). Investors remained cautious as uncertainty looms over US trade policy, following conflicting statements from the White House regarding President Donald Trump's proposed tariffs on Canada and Mexico—two of the United States' main crude suppliers.

White House spokeswoman Karoline Leavitt confirmed on Tuesday that Trump remains committed to imposing tariffs on Canada and Mexico as planned on Saturday. On Wednesday, Trump's nominee for commerce secretary, Howard Lutnick, suggested that Canada and Mexico could avoid tariffs if they immediately tighten border controls on fentanyl and curb China's advances in artificial intelligence. Lutnick advocated broad, blanket tariffs that target countries rather than specific products, reinforcing a more aggressive stance toward China.

Crude oil prices also remained under pressure after the Energy Information Administration (EIA) reported a 3.463 million barrel increase in US stockpiles for the week ended January 24. This marked the first build in stocks after nine consecutive weeks of declines, which was in line with analysts' expectations for a 3.19 million barrel increase. Recent winter storms across the US have further dented oil demand.

On the supply side, Russian crude exports from western ports are expected to fall by 8% in February compared to January, as Moscow ramps up refining operations. The decline comes amid fresh US sanctions, which have tightened restrictions on Russian crude exports.

Meanwhile, oil prices could face additional headwinds from the Federal Reserve's (Fed) cautious monetary policy approach. As widely anticipated, the Fed kept its benchmark interest rate unchanged at 4.25%-4.50% during its January meeting. High borrowing costs typically weigh on economic activity, further dampening oil demand. (AL)

Source: FXstreet