Investing.com-- Oil prices steadied in Asian trade on Wednesday after logging some losses this week on U.S. President Donald Trump’s declaration of a national emergency to ramp up energy production.
But crude was sitting on a strong run-up in recent weeks, as stricter U.S. sanctions on Russia’s oil industry still presented the prospect of tighter supplies in the near-term. Oil shipping rates also rose sharply on the move, heralding tighter markets.
Trump remained a major point of focus for markets, as the President also raised the possibility of increased trade tariffs against major economies, particularly major oil producer Canada and top importer China.
Brent oil futures expiring in March fell slightly to $79.24 a barrel, while West Texas Intermediate crude futures fell 0.2% to $75.69 a barrel by 20:34 ET (01:34 GMT).
Traders are now looking to upcoming U.S. inventory data for more cues on supply.
Trump declares national emergency to boost production
Trump declared a national emergency on Monday to greatly increase U.S. energy production- one of his first moves after taking office.
The President signed an executive order outlining the move, which allowed more output from domestic producers, and also scaled back climate change policies enforced by the outgoing Biden administration. Trump also said the U.S. will withdraw from the Paris climate accords.
While Trump did not specify just by how much oil production will increase, analysts said that the move was unlikely to spur any near-term increases in supply.
Traders were also cautious over Trump’s trade policies, after the President raised the prospect of 10% tariffs on China and 25% tariffs on Canada and Mexico.
China was the biggest point of concern for oil markets, given that more economic pressure on the country could further dent its appetite for crude.
Russian sanctions, cold weather underpin oil
Recent U.S. sanctions against Russia’s oil industry- the most aggressive yet- are expected to tighten oil markets in the near-term, especially given that the U.S. issued restrictions against Russia’s fleet of oil tankers.
This severely limits Moscow’s ability to distribute crude, and could see buyers in Asia rush to find new sources of oil, or pay higher shipping costs to bring in Russian crude.
Cold weather in the U.S. and Europe is also expected to push up demand for heating oil, while disrupting crude production in parts of the U.S.
But cold weather is also expected to disrupt travel in the two regions.