Oil prices saw a slight increase on Wednesday, primarily supported by a weaker US dollar, which makes the commodity less expensive for buyers using other currencies. 

However, the upward movement of oil prices was limited by growing concerns about a potential economic slowdown in the United States. 

Additionally, worries about the impact of tariffs on global economic growth further contributed to capping the gains in oil prices. 

The interplay of these factors created a somewhat volatile and uncertain environment for oil markets, with traders closely monitoring economic indicators and trade developments for further cues.

“Even so, ICE Brent continues to trade below US$70/bbl and prices will likely remain sensitive to external developments,” analysts at ING Group, said in a note. 

At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $67.32 per barrel, up 1.6%.

Brent crude oil on the Intercontinental Exchange was at $70.51 per barrel, also up 1.4% from the previous close. 

ING analysts said:

The oil market seems to be largely ignoring Ukraine agreeing to a US-brokered ceasefire. There is still uncertainty over where Russia stands on the proposed agreement.

EIA estimates

The US Energy Information Administration (EIA) has released its latest Short-Term Energy Outlook, and the report indicated that previously anticipated surpluses in the oil market for 2025 and 2026 have been revised downward. 

This adjustment is attributed to the impact of sanctions, which have presumably affected production or trade, thereby tightening the market and reducing the expected excess supply. 

The EIA’s assessment suggests that the sanctions have had a more significant impact on market dynamics than initially anticipated, leading to a less pronounced surplus in the coming years.

The EIA has revised its global market forecast for 2025, now anticipating a surplus of 100,000 barrels per day, a significant decrease from the previously projected surplus of 500,000 barrels a day.

In 2026, the EIA cut its surplus forecast from 1 million barrels a day to 500,000 barrels per day.

Despite the recent decline in WTI crude prices, US crude oil production estimates for 2025 and 2026 were slightly increased.

Trump’s tariffs

President Trump’s protectionist policies have caused global markets to react. 

He has imposed tariffs on major oil suppliers Canada and Mexico and increased duties on China.

These actions have resulted in retaliatory measures from the affected countries.

Over the weekend, Trump acknowledged the possibility of a “period of transition” for the United States economy. 

He expressed concerns about the potential for a recession but did not definitively state that one was imminent. 

His remarks came amidst ongoing trade tensions with China and other countries, as well as concerns about slowing global economic growth. 

The President’s comments sparked further debate about the health of the US economy and the potential impact of his administration’s policies. 

This could also be bearish for crude oil demand as the US is the top consumer of the fuel. 

More oil from Iraq

The oil market could also see additional supply from Iraq. Discussions around the imminent resumption of oil flow through a pipeline in Northern Iraq have been ongoing for several weeks.

The pipeline links the Mediterranean port of Ceyhan in Turkey to the oil fields located near Kirkuk in the semi-autonomous Kurdish region of Iraq.

The arbitration court’s ruling led to a disagreement over marketing rights, resulting in the pipeline’s closure for nearly two years.

Although it was announced previously that an agreement had been reached, this is not the case.

The pipeline will initially pump approximately 185,000 barrels per day, about half of its total capacity, according to Commerzbank AG.

“However, Iraq is also bound by the OPEC+ cut agreement, which limits the scope for expanding the oil supply,” Cartsen Fritsch, commodity analyst at Commerzbank, said. 

Iraq’s daily oil production can only increase by 12,000 to 13,000 barrels per month starting in April. 

Otherwise, production would have to be cut elsewhere if Iraq does not want to produce more oil than permitted, as it did for some time last year.

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Inflation in the US dropped in February, but the market reaction remained muted. 

Concerns persist that tariff-related price increases by companies may elevate inflation readings during the summer months, according to the ING Group.

The February US consumer price inflation data was lower than expected, with both headline and core inflation at 0.2% month-on-month, compared to consensus predictions of 0.3%.

The annual rate of headline inflation decreased to 2.8% from 3%, and core inflation decreased to 3.1% from 3.3%.

“The details are less rosy though with a substantial 4% MoM drop in air fares the main factor driving the softer inflation readings,” James Knightley, chief international economist at ING, said in a report.

Tariff threat could reinvigorate the inflation threat

“Moreover, we are wary of anecdotal evidence of firms pre-emptively raising prices ahead of potential tariffs – pricing of longer-term contracts has to take account of potential input cost increases right now,” Knightley said. 

The NFIB survey on Tuesday reported a 10-point increase in the proportion of businesses raising prices, and the Fed’s Beige Book also noted this trend last week.

The spending power of consumers could be negatively impacted by tariff uncertainty and price increases.

This could lead to weaker consumer sentiment and reduced spending, according to ING.

Knightley added:

They may also mean that the lack of clarity on the trading environment and the threat of reciprocal tariffs weighs on corporate sentiment, holding back on investment and hiring until there is greater clarity – hence the growing talk of potential recession.

However, the economy is currently expanding and creating jobs. Due to the possibility of increased inflation, ING does not anticipate the Fed cutting rates before September. 

Housing costs could slow dramatically later in the year

However, ING said it was monitoring new tenant rents closely, as the Cleveland Federal Reserve bank reports a rapid decline.

The effect of tariffs on inflation could be significantly mitigated if CPI housing measures cool later in the year as a result of this.

Let’s delve deeper into the implications of the statement that housing constitutes over 40% of the core inflation basket. 

Given the substantial weight of housing in the calculation of core inflation, any shifts in the housing market will significantly impact the overall inflation rate.

If the economy were to show signs of weakness, it could trigger a cascade of effects in the housing market. 

A weakening economy often leads to job losses, reduced consumer confidence, and decreased spending. 

These factors can lead to a decline in demand for housing, which could, in turn, lead to lower housing prices or at least a slowdown in the rate of housing price increases.

Fed’s monetary easing path

A slowdown in housing price increases would directly contribute to a lower core inflation rate. 

If this coincides with other signs of economic weakness, it could create a scenario where the Federal Reserve sees the need to cut interest rates more rapidly than previously anticipated.

Lower interest rates make borrowing cheaper, which can encourage businesses to invest and consumers to spend. 

In the context of the housing market, lower interest rates can make mortgages more affordable, potentially boosting demand and supporting housing prices.

Therefore, if the economy does show signs of weakness and the housing market cools down, the Fed could be pressured to implement more rapid rate cuts as early as the end of this year and into early 2026, according to ING. 

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Crocs (NASDAQ: CROX) shares gained around 3% on Wednesday after Loop Capital upgraded the stock to a “Buy” from “Hold,” citing an attractive valuation and growth prospects for its Hey Dude brand.

The firm set a price target implying nearly 12% upside potential for the stock.

Loop Capital analyst Laura Champine highlighted the company’s potential for direct-to-consumer (DTC) growth in 2024, saying that management sounded confident about expansion at a recent investor conference.

“We think valuation is attractive, and the company sounded on plan at our conference this week,” Champine wrote on Wednesday.

“Management expects DTC to grow this year at Hey Dude, and we think our expectation for 1% growth in the channel may prove conservative. Hey Dude laps easy comparisons, and DTC may show upside growth in Q1 as the brand laps -11% YoY,” she said.

HEYDUDE pulls back production in China on tariffs by US

Crocs stock has seen volatility over the past week, gaining more than 5% in the wake of President Donald Trump’s announcement of an additional 10% tariff on Chinese goods.

The company has been shifting production away from China in response to previous tariff measures.

“The additional 10% tariff that has been announced recently on Chinese-made goods is not in CROX’s previous outlook,” Champine noted.

That said, Hey Dude is pulling back production in China to 27% of the total, which is a massive shift as it adjusts to the volatile tariff environment.

Despite concerns about cost pressures, Loop Capital believes that market uncertainty surrounding tariffs has created a buying opportunity for investors.

Stifel reaffirms bullish outlook on CROX

On Monday, Stifel analysts reaffirmed their Buy rating on Crocs shares and maintained a price target of $138.

Following discussions with Erinn Murphy, Senior Vice President of Investor Relations & Strategy at Crocs, Stifel expressed confidence in the company’s future performance.

Their analysis pointed to Crocs’ strong margin profile, which includes a 58.76% gross margin and a 20.09% return on assets.

The analysts pointed out that at 6.5 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) based on calendar year 2025 estimates, the market may not be fully recognizing the international growth prospects and could be underestimating the contribution from the HEYDUDE brand

BoFA expresses optimises in Crocs’ North American sales in 2025

BofA Securities analyst Christopher Nardone also reiterated a Buy rating on Crocs last month, setting a price target of $153.

He expressed optimism that Crocs’ North American sales could see modest growth in 2025, supported by a strong wholesale order book for the next six months and upcoming product innovations.

New product launches, such as the InMotion clog priced at $60, expanded sandal offerings, and a greater focus on slippers in the second half of the year, are expected to drive consumer interest.

Additionally, continued growth in Jibbitz accessories and brand collaborations are likely to contribute to sales momentum.

While Crocs may see a decline in first-quarter sales due to calendar shifts and tough comparisons with the previous year’s strong growth, analysts anticipate a rebound in the second quarter.

International markets are expected to be the key driver of overall brand growth in 2025 and beyond.

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Investors continued to be rattled by escalating tensions between the US and its key trade partners, causing the Dow Jones Industrial Average to fall further on Wednesday.

The blue-chip index experienced a decline of 364 points, representing a 0.8% drop at the time of writing.

The Nasdaq Composite rose 0.3%, while the S&P 500 declined 0.3% from the previous close.

The US Consumer Price Index (CPI) increased by 0.2% in the reported month, resulting in an annual inflation rate of 2.8%.

This was below the Dow Jones estimates of 0.3% monthly and 2.9% annually.

Core CPI, which excludes food and energy prices, also rose by 0.2% for the month and 3.1% for the year, both below expectations.

The CPI report eased concerns that President Donald Trump’s volatile trade policy would lead to stagflation, which contributed to the recent sell-off. 

The report also fueled hopes that the Federal Reserve could cut rates again later this year if necessary.

“Markets have been rocked by President Trump’s tariffs,” said David Morrison, senior market analyst at Trade Nation. 

Investors are finding it difficult to stay informed due to the numerous postponements, exceptions, and retaliations that have arisen in response to the newly imposed 25% levies on US imports of aluminium and steel. 

These levies expand upon existing tariffs already affecting Canada, Mexico, and China.

Morrison added:

But the overall sense is that tariffs are no longer just a threat ahead of negotiations. Instead, in a Trump administration, they are a weapon, however blunt, which President Trump is prepared to employ.

Airline stocks continue to fall

Airline stocks experienced a significant decline on Wednesday, following cautionary statements from major carriers Delta Airlines, American Airlines, and Southwest Airlines. 

These airlines expressed concerns that a weakening economic environment could potentially dampen domestic travel demand. 

This announcement triggered a sell-off in the airline sector, as investors reacted to the possibility of lower profits and revenue for airlines in the coming months. 

The downturn in airline stocks reflects broader concerns about the health of the economy and the potential impact of economic headwinds on various industries.

At the time of writing, shares of Delta Air Lines were down nearly 5%, while those of United Airlines slipped more than 6%. 

American Airlines also slumped more than 4.4% on Wednesday. 

Semiconductor ETF 

The VanEck Semiconductor ETF (SMH) was up 3.6% on Wednesday, putting it on track for its first gain in three sessions.

The exchange traded fund had its best day since September 19, 2024, when it rose 4.3%. 

Despite this, the fund is still expected to close the week down 1.5%, marking its fourth consecutive week of losses.

Intel jumps

Intel’s stock price experienced a significant surge, increasing by 8%, following a report from Reuters. 

The report detailed a proposal from Taiwan Semiconductor Manufacturing Company (TSMC) directed towards major US chipmakers NVIDIA, Advanced Micro Devices (AMD), and Broadcom. 

The proposal suggested the formation of a joint venture to oversee and manage Intel’s foundry division. 

This potential collaboration hints at a significant shift in the semiconductor industry landscape, with implications for Intel’s strategic direction and market positioning.

However, the stock gave up most of its gains from earlier in the day, and was up 2.3% at the time of writing. 

Groupon Inc jumps

Groupon’s shares experienced a surge of nearly 35% following the release of their full-year revenue guidance, which surpassed the expectations of market analysts. 

The e-commerce marketplace projected full-year revenue to fall within the range of $493 million to $500 million. 

This forecast exceeded the consensus estimate of $491.5 million, as predicted by analysts surveyed by FactSet. 

The better-than-expected guidance has instilled confidence among investors, leading to a positive market reaction and a significant increase in Groupon’s share price.

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Canada’s federal government will impose 25% tariffs on C$29.8 billion (around $20 billion) worth of US goods in response to steel and aluminum tariffs announced today by President Donald Trump’s administration.

The US has applied 25% tariffs on steel and aluminum imports from all countries, including Canada, as part of Trump’s broader effort to reshape global trade.

As Prime Minister Justin Trudeau prepares to transition power to his successor, Mark Carney, tensions in the ongoing economic dispute continue to rise.

Canada’s retaliatory tariffs will take effect at 12:01 p.m. ET on Thursday.

These duties come in addition to the 25% levies Canada imposed on $30 billion in U.S. goods earlier this month.

The latest tariffs will target $12.6 billion in steel and $3 billion in aluminum products, with additional countermeasures on goods such as computers, sports equipment, and cast iron.

US tariffs take effect

The increase in tariffs on imports of steel and aluminium by President Trump took effect Wednesday.

Trump’s threat of tariffs aligns with, what seems to be, his wider strategy of rewriting global trade rules to benefit US corporations at the expense of others, escalating the trade war.

Trump outlined the decision through his Truth Social platform and explained the tariffs were needed to protect American businesses.

Earlier this week, Trump also called on Canada to eliminate what he described as an “Anti-American Farmer Tariff” of 250% to 390% on various US dairy products, labelling it “outrageous.”

Transition of power in Canada

The US-Canada trade war intensifies as Prime Minister Justin Trudeau prepares to hand over power to his successor, Mark Carney, following his victory in the ruling Liberal Party’s leadership race on Sunday.

Carney, who is set to be sworn in later this week, stated on Monday that he could not engage in direct talks with President Donald Trump until he officially assumed office.

Meanwhile, Trump reignited tensions on social media, stating that he wanted Canada “to become our cherished Fifty-First State.”

Speaking at a steel plant in Ontario, Carney reaffirmed his willingness to negotiate with Trump but emphasized that any discussions must respect Canada’s sovereignty.

“I’m ready to sit down with President Trump at the appropriate time, in a framework that respects Canadian sovereignty and fosters a more comprehensive approach to trade,” he said.

Carney also highlighted the significance of renewing economic ties between the two nations.

“We are all going to be better off when the greatest economic and security partnership in the world is renewed and relaunched,” he said. “We have a new government, but the same commitment.”

The broader economic impact

Global financial markets have experienced heightened volatility amid President Donald Trump’s return to the White House, with economists warning of a potential U.S. recession.

In an interview on Fox News’ “Sunday Morning Futures,” Trump avoided directly addressing the risk of a downturn, stating, “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”

Despite growing concerns, Commerce Secretary Howard Lutnick dismissed fears of a recession.

Speaking on NBC’s “Meet the Press,” he assured Americans that a downturn is unlikely, emphasizing Trump’s reciprocal tariff strategy as a measure to level global trade dynamics.

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