Oil prices picked up on Tuesday, after the previous session's sell-off, as the market assessed US President-elect Donald Trump's planned trade tariffs on Mexico and Canada and his aim to increase US crude production.
Oil prices had fallen more than $2 a barrel on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a ceasefire in the Israel-Hezbollah conflict. A senior Israeli official said Israel looks set to approve a US plan for a ceasefire on Tuesday, but some analysts said Monday's sell-off in oil prices had been overdone.
Brent crude futures were up 43 cents, or 0.6%, at $73.44 a barrel as of 1414 GMT. US West Texas Intermediate crude futures were at $69.38 a barrel, up 44 cents, or 0.6%.
Brent crude futures fluctuated between $73.30 and $73.80 a barrel in afternoon trading.
"Today’s intra-day fluctuations are probably more of the function of assessing Trump’s overnight pledge to impose tariffs on Mexico, Canada and China," PVM analyst Tamas Varga said.
On Monday, Trump said he would impose a 25% tariff on all products coming into the US from Mexico and Canada.
The vast majority of Canada's 4 million bpd of crude exports go to the US Analysts have said it is unlikely Trump would impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the US produces.
On Monday, Reuters reported that Trump's team is also preparing an energy package to roll out within days of his taking office that would increase oil drilling.
A senior executive at Exxon Mobil said on Tuesday that US oil and gas producers are unlikely to "radically increase'' production.
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Market reaction on Monday to the Israel-Lebanon ceasefire news was "over the top" as the broader Middle East conflict has "never actually disrupted supplies significantly to induce war premiums" this year, said senior market analyst Priyanka Sachdeva at Phillip Nova.
Elsewhere, OPEC+ at its next meeting on Sunday may consider leaving its current oil output cuts in place from Jan. 1. The producer group is already postponing hikes amid global demand worries.
