WTI Remains Below Profit Point for Drillers

---

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Though investors bought the dip in Tuesday trading, crude oil prices in the U.S. economy remained below the point where drillers said they can make a profit.

U.S. President Donald Trump on Monday doubled down on his tariff threats with China, threatening another 50% in so-called reciprocal tariffs. Combined with a 20% tariff imposed in response to alleged fentanyl trafficking, and another 34% announced last week, new tariffs on Chinese imports would reach a combined 104%.

Markets were upended by Trump's tariff agenda. The president believes tariffs would support federal revenue amid deep tax cuts, though his sweeping announcement of a 10% tariff, a tax on imports, is upending a global order that's existed since the end of World War II.

Broader markets since Trump's tariff announcement turned decidedly south. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, dropped more than 15% since April 2. Stock indexes are flirting with a bear market, which is when prices drop 20% from the recent peak.

WTI had clawed back some ground by Tuesday morning, however. At the opening bell, WTI was up 1.3% from the prior close to trade near $61.50 per barrel. Markets in general were upbeat on word that U.S. officials were open to negotiations with top trading partners.

U.S. Treasury Secretary Scott Bessent said around 70 countries have reached out for talks, while U.S. Trade Representative Jamieson Greer spoke with officials in Tokyo. China, the second-largest economy behind the United States, is not backing down, however.

But WTI by 5:00 p.m. CDT had dipped as low as $57.88 per barrel.

"If the United States ignores the interests of the two countries and the international community and insists on fighting tariff wars and trade wars, China will surely fight till the end," Chinese Foreign Ministry spokesperson Lin Jian was quoted by the official Xinhua News Agency as saying.

The whipsaw in the markets, meanwhile, prompted the U.S. Energy Information Administration to delay the release of its regular monthly market report. "We are re-running our models to account for the most recent market developments," the administration said.

The report will be released Thursday, two days later than expected.

Meanwhile, despite the rebound on Tuesday, oil prices are still below the point at which drillers said they could make a profit. Last month, a survey by the Federal Reserve Bank of Dallas of energy sector representatives found firms need $65 per barrel to make a profit, a dollar higher per barrel than at this time last year.

Respondents to the survey expressed reservations over Trump's energy and trade policies, questioning how the pursuit of lower oil prices would incentivize more drilling.

The EIA, in its monthly market report for March, said it expected WTI to average $74 per barrel this year, before sinking to $68 per barrel next year.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).