Oil prices edge lower as concerns over tariff impact grow
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By Nicole Jao
(Reuters) - Oil prices fell for a second day in early trade on Tuesday on worries that U.S. tariffs on Canada, Mexico and China would slow economies around the world and hurt energy demand while OPEC+ ramps up its supply.
Brent futures fell 29 cents, or 0.42%, to $68.99 a barrel at 0016 GMT, while U.S. West Texas Intermediate crude futures lost 36 cents, or 0.55%, to $65.67 a barrel.
U.S. President Donald Trump's protectionist policies have roiled markets across the world, with Trump imposing and then delaying tariffs on his country's biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.
Over the weekend, Trump said a "period of transition" for the economy is likely but declined to predict whether the U.S. could face a recession amid stock market concerns about his tariff actions
"Trump's comments triggered a wave of selling as investors started pricing in the risk of weaker growth in demand," Daniel Hynes, senior commodity strategist at ANZ said.
Stocks, which crude prices often follow, slumped on Monday, with all three major U.S. indexes suffering sharp declines. The S&P 500 had its biggest one-day drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.
U.S. Commerce Secretary Howard Lutnick said on Sunday Trump would not let up pressure on tariffs on Mexico, Canada and China.
On the supply front, Russia's Deputy Prime Minister Alexander Novak said on Friday the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there were market imbalances.
In the U.S., crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of weekly reports from industry group the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) later on Tuesday, and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, at 10:30 a.m. EDT (1430 GMT) on Wednesday.
(Reporting by Nicole Jao in New York; Editing by Jacqueline Wong)
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