Crude oil futures were higher in mid-morning trade in Asia Monday after the US announced that the tariffs on Mexico will be suspended indefinitely. At 10:06 am Singapore time (0206 GMT), ICE Brent August futures rose 12 cents/b (0.19%) from Friday’s settle at $63.41/b, while the NYMEX July light sweet crude futures contract was up 28 cents/b (0.52%) at $54.27/b.
US President Donald Trump tweeted his decision over the weekend to suspend the planned 5% tariff on all goods from Mexico after the latter pledged to “take unprecedented steps to increase enforcement to curb irregular migration,” according to the US Department of State. President Trump had earlier threatened to impose tariffs on imports from Mexico unless Mexico acts to stop the flow of illegal immigrants across the border.
“While the details of the underlying deal remain a bit unclear, global equity markets (not to mention the peso) are likely to react favorably to the news, if the negative reaction to the initial tariff announcement is anything to go by,” ANZ analysts said in a note Monday. Analysts pointed out that the US-China trade conflict, however, remained a concern with no end in sight in the near term.
“Compared to the broader US-China trade conflict, the US-Mexico issue appears to be a lower hanging fruit for the Trump administration and one that is expected to fade into the background with the deal that had reportedly been established,” said Jingyi Pan, market strategist at IG.
Elsewhere, data released by Baker Hughes on Friday showed that the number of active rigs for oil in the US fell by 11 to 789 for the week ended June 7 – the lowest rig count since February 2018. The total active US rig count, meanwhile, also fell by 9 to 975, the data showed.