Trader Thoughts - Trump's Tariffs on Columbia increase the Prospect of Further Selling Pressure in Crude

Head of Research

27 Jan 2025

While we’ve seen some goodwill in risk markets of late, the emergence of DeepSeek in the AI space, and Trump’s weaponizing of 25% tariffs on Columbia has sent early shockwaves through broad markets on Monday.

On the subject of tariffs, while the Columbian government have backtracked and will now offer logistics to the deportees, which may see Trump review his position, today’s actions matter to markets as it shows Trump is clearly credible on the use of aggressive tariffs – in this case as a responsive measure, but it does solidify the backbone to pro-active measures that are due to kick in on certain nations on 1 February.

Preview

We’re seeing a weaker open in crude futures, and at the margin, we can think that today’s actions do offer some increased tailwinds for Trump’s pursuits of lower oil prices - and while his ability to achieve lower oil prices is not straightforward, it does seem that he hold all the cards. So tactically fighting Trump and countering the recent drawdown from $82.81 (Brent CFDs) seems the wrong position and there is an asymmetric risk for crude, notably with our Brent CFD pricing printing a lower high in each of the past 7 sessions, with the sellers fading any intraday rallies. With Brent printing another lower low and pushing through the 38.2 fibo of the Dec-Jan rally, the move lower is seemingly there for chasing, as it opens up a run lower into $76.25 and even $75.

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