Apr 16 / Timothy Vince

Market Update – Post Tariff Impacts

"Trump's tariffs raise concerns about U.S. economic growth and trade flow, which should affect the energy market."
  Back to main blog page

Flat Price Impact

  • Crude and refined products both fell on “Liberation Day” April 2nd on demand destruction fears from tariffs. Higher prices for imported goods can hurt industrial output, global trade volumes and slow freight and logistics activity. The market now expects lower demand for energy.
  • There is now a concern for global growth leading to a risk-off approach in the market. Countries like China are one of the largest sources of oil demand and they are the ones being targeted most heavily by tariffs.

Flat Price Impact

  • Crude and HO remain backwardated but the curves are both flattening out.
  • The slope of the WTI curve is dropping, reflecting less prompt month demand.

Figure 1: WTI Forward Curve


Source: Refinitiv, Hedgepoint



The heating oil forward curve has actually gotten slightly more backwardated, showing some demand for prompt heating oil. However, we still need to watch the curve as heating oil is a seasonal commodity and has been in contango back in 2024 when demand was soft.

Figure 2: HO Forward Curve


Source: Refinitiv, Hedgepoint


Dollar Impact

The market sees tariffs as inflationary. There are also concerns about economic growth now. The Fed may be forced to cut rates soon if growth concerns continue, but the Fed still hasn’t reached its goal of 2% inflation, making the situation a hard one. In summary the market sees the Fed easing, inflation risk and also U.S. economic vulnerability.

Looking Forward

The Trump administration is in the middle of a 90 day pause and has carved out tariff exemptions on some consumer products. Many countries are proposing to levy tariffs on the US in response. Some countries are negotiating deals with the US to avoid tariffs. These negotiations are not open to the public, making it hard to grasp their possible outcome, highlighting the importance of keeping updated. The EU expects US tariffs to remain as their talks with the Trump administration has made little progress thus far. Meanwhile, market believes that China is preparing for a longer trade war with the US.

Weekly Report — Energy

Written by Timothy Vince
timothy.vince@hedgepointglobal.com
Reviewed by Livea Coda
livea.coda@hedgepointglobal.com
www.hedgepointglobal.com

Disclaimer

This document has been prepared by Hedgepoint Global Markets LLC and its affiliates (“HPGM”) solely for informational and instructional purposes, without the purpose of instituting obligations or commitments to third parties, nor is it intended to promote an offer, or solicitation of an offer of sale or purchase relating to any securities, commodities interests or investment products. Hedgepoint Commodities LLC (“HPC”), a wholly owned entity of HPGM, is an Introducing Broker and a registered member of the National Futures Association. The trading of commodities interests such as futures, options, and swaps involves substantial risk of loss and may not be suitable for all investors.  Past performance is not necessarily indicative of future results. Customers should rely on their own independent judgement and outside advisors before entering in any transaction that are introduced by the firm. HPGM and its associates expressly disclaim any use of the information contained herein that directly or indirectly result in damages or damages of any kind. In case of questions not resolved by the first instance of customer contact (client.services@hedgepointglobal.com), please contact our internal ombudsman channel (ombudsman@hedgepointglobal.com) or 0800-878- 8408/ouvidoria@hedgepointglobal.com (only for customers in Brazil).

To access this report, you need to be a subscriber.