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Oil Prices Rise on Strong Demand Outlook, Weaker US Dollar

An Oil refinery is seen from Maracaibo, Zulia State, Venezuela on March 19, 2025. (Photo by Pedro MATTEY / AFP)
An Oil refinery is seen from Maracaibo, Zulia State, Venezuela on March 19, 2025. (Photo by Pedro MATTEY / AFP)
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Oil Prices Rise on Strong Demand Outlook, Weaker US Dollar

An Oil refinery is seen from Maracaibo, Zulia State, Venezuela on March 19, 2025. (Photo by Pedro MATTEY / AFP)
An Oil refinery is seen from Maracaibo, Zulia State, Venezuela on March 19, 2025. (Photo by Pedro MATTEY / AFP)

Oil prices rose on Thursday, boosted by a strong outlook for demand in the United States after fuel inventories fell more than expected, and a weaker US dollar.

Brent crude futures were up 34 cents, or 0.5%, to stand at $71.12 a barrel by 0745 GMT, their highest level since March 3. US West Texas Intermediate crude (WTI) gained 42 cents, or 0.6%, to $67.58.

US government data showed a higher-than-expected drawdown last week in distillate inventories, including diesel and heating oil, which fell by 2.8 million barrels, outstripping a drop of 300,000 barrels expected in a Reuters poll.

"US oil demand outlook remains healthy despite lower air travel passenger volumes," JPMorgan analysts said in a note, adding that reduced US travel activity did not signal broader weakness in the demand outlook.

Global oil demand averaged 101.8 million barrels per day (bpd), an annual increase of 1.5 million bpd, the analysts said.

US crude inventories, rose 1.7 million barrels, however, exceeding expectations for an increase of 512,000 barrels in an earlier Reuters poll.

A weaker greenback also contributed to oil's gains, with the dollar on a downtrend since the end of February.

"Throughout the week, the weakness of the dollar appeared to provide some support for dollar-denominated oil prices," said Phillip Nova senior market analyst Priyanka Sachdeva.

Oil investors remain hopeful of the prospect of the Federal Reserve easing interest rates by 50 basis points by year's end, she added.

Some analysts however are expecting an uneven price uptrend in the near term.

"I am expecting a choppy upward drift in the oil markets right now," said OANDA's senior market analyst Kelvin Wong, adding that bullish price drivers are stimulus measures out from China and the return of hostilities between Israel and Hamas.

Global risk premiums rose after Israel launched a new ground operation on Wednesday in Gaza after breaking a ceasefire of nearly two months.

The United States kept up airstrikes on Houthi targets in Yemen in retaliation for the group's attacks on ships in the Red Sea. US President Donald Trump has also vowed to hold Iran responsible for future Houthi attacks.

Bearish near-term market drivers include the upcoming production rise among OPEC+ members and a likely lackluster US S&P Global Services PMI flash reading for March, OANDA's Wong added.

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Auto Industry Rocked by Trump's 25% Tariffs on US Imports

New Toyota vehicles are stored at the Toyota Logistics Service Inc., an imports processing facility at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)
New Toyota vehicles are stored at the Toyota Logistics Service Inc., an imports processing facility at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)
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Auto Industry Rocked by Trump's 25% Tariffs on US Imports

New Toyota vehicles are stored at the Toyota Logistics Service Inc., an imports processing facility at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)
New Toyota vehicles are stored at the Toyota Logistics Service Inc., an imports processing facility at the Port of Long Beach in Long Beach, Calif., Wednesday, March 26, 2025. (AP Photo/Damian Dovarganes)

US automakers and their global rivals were rocked on Wednesday by President Donald Trump's announcement that he would impose 25% tariffs on all vehicles and foreign-made auto parts imported into the United States.
The new levies, if kept for an extended period, could add thousands of dollars to the cost of an average US vehicle purchase and impede car production across North America.
That will be because of the intertwined manufacturing operations developed by car makers across Canada, Mexico and the United States over the last three decades.
Nearly half of all cars sold in the US last year were imported, research firm GlobalData says, according to Reuters.
In response to the news, shares of General Motors slumped 8% in after-market trading. Shares in Ford and US-traded shares of Chrysler-parent Stellantis fell about 4.5% each.
In Asia, shares in Toyota Motor, Honda Motor and Hyundai Motor all fell between 3% and 4%.
Shares in Tesla, which makes all the cars sold in the United States locally but with some imported parts, were down 1.3%.
Trump said the duties announced on Wednesday could be a net neutral or even good for Tesla, adding that its CEO, and his close ally, Elon Musk, did not advise him regarding auto tariffs.
In a post on X following the news, Musk said the tariffs would also affect Tesla.
"This will affect the price of parts in Tesla cars that come from other countries," he wrote in another post on X. "The cost impact is not trivial."
The companies did not immediately return emails seeking comment.
Trump's tariffs and threats to impose them have sowed uncertainty in businesses and roiled global markets since he returned to the White House in January.
On Wednesday, Trump reiterated that he expected the auto tariffs to prompt automakers to boost investment in the United States, instead of Canada or Mexico.
Autos Drive America, a group representing major foreign automakers such as Honda, Hyundai, Toyota and Volkswagen , said the "tariffs imposed today will make it more expensive to produce and sell cars in the United States, ultimately leading to higher prices, fewer options for consumers, and fewer manufacturing jobs in the US."
Automakers in North America have largely enjoyed free trade status since 1994. Trump's 2020 US-Mexico-Canada Agreement (USMCA) imposed new rules designed to spur regional content production.
After clamping tariffs of 25% on Mexico and Canada in early March, Trump allowed a one-month reprieve for vehicles produced in compliance with the terms of his USMCA, which benefited American companies.
The new rules do not extend that reprieve.
"Companies that have invested hundreds of millions and billions of dollars on plants in Canada and Mexico will likely see their profits cut dramatically over the next few quarters, if not into a couple years," said Sam Fiorani, analyst at AutoForecast Solutions.
"We're going to look at adjusting our sales and production forecasts because this will throw everything into chaos."
The White House said that 25% tariffs on automotive parts imported to the US would take effect no later than May 3, taxing key items such as engines, transmissions, powertrain parts, and electrical components.
Importers of automobiles under the USMCA will get the chance to certify their US content so that only non-US content is taxed, the White House said.
Before the unveiling of the new tariffs, Cox Automotive, an automotive services provider, predicted they would add $3,000 to the cost of a US-made vehicle and $6,000 on vehicles made in Canada or Mexico, without exemptions.
If tariffs go through, by mid-April Cox expects disruption to "virtually all" North American vehicle output, leading to 20,000 fewer vehicles a day, or a hit of about 30% to production.
The United Auto Workers union, which represents factory workers at Big Three Detroit automakers, praised Trump's action.
"With these tariffs, thousands of good-paying blue collar auto jobs could be brought back to working-class communities across the United States within a matter of months, simply by adding additional shifts or lines in a number of underutilized auto plants," UAW President Shawn Fain said in a statement.