(Bloomberg) — Oil edged higher after a weekly drop, as traders gauged President-elect Donald Trump’s threat to reimpose US control over the Panama Canal.
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Brent crude traded near $73 a barrel after a 2.1% decline last week, with West Texas Intermediate below $70. Trump said the key waterway — which transports about 2% of global oil supply — is charging “exorbitant” fees, a claim that Panama’s president rebuffed.
The criticism of Panama follows threats by Trump to impose tariffs on Canada, Mexico and China — as well as on the European Union if the bloc doesn’t buy more US oil and natural gas — that have upended global politics a month before he takes office. The increased uncertainty has failed to jolt crude out of a narrow range it has traded in since mid-October, with lackluster demand in China and expectations of ample supply tempering gains.
“Trump’s threats and rhetoric on the international scene are mostly noise for the oil markets at this point,” said Vandana Hari, founder of Vanda Insights in Singapore. “Given the thin trading and lack of strong cues, I expect crude to slide sideways into the year-end.”
Hedge funds, however, are becoming more bullish on the outlook for both Brent and WTI, with the increase in net-longs for the US marker rising by the most in over a year last week. That came after prices rallied on the prospect of sanctions that would reduce supplies of Russian and Iranian oil.
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