WTI falls toward $72.00 as traders await clarity on US trade policy

• WTI price faces challenges as traders adopt caution amid rising uncertainty over US trade policy.
• Trump's commerce secretary nominee Howard Lutnick suggested that Canada and Mexico could avoid tariffs.
• Oil prices struggled as the EIA reported a 3.463 million-barrel increase in US stockpiles for the previous week.

West Texas Intermediate (WTI) crude Oil price continues to decline for the second consecutive session, trading around $72.20 per barrel during early European hours on Thursday. Investors remain cautious as uncertainty looms over United States (US) trade policy, following conflicting statements from the White House regarding President Donald Trump's proposed tariffs on Canada and Mexico--two key crude suppliers to the United States.

White House spokeswoman Karoline Leavitt confirmed on Tuesday that Trump remains committed to implementing tariffs on Canada and Mexico as planned on Saturday. On Wednesday, Trump's commerce secretary nominee, Howard Lutnick, suggested that Canada and Mexico could avoid tariffs if they swiftly tighten border controls on fentanyl and curb China's advancements in artificial intelligence. Lutnick advocates for broad, across-the-board tariffs targeting countries rather than specific products, reinforcing a more aggressive stance toward China.

Crude Oil prices also remain under pressure after the Energy Information Administration (EIA) reported a 3.463 million-barrel increase in US stockpiles for the week ending January 24. This marks the first inventory build after nine consecutive weeks of declines, aligning closely with analysts' expectations of a 3.19 million-barrel rise. The recent winter storms across the US have further dampened Oil demand.

On the supply front, Russia's crude Oil exports from western ports are expected to decline by 8% in February compared to January, as Moscow ramps up refining operations. The drop comes amid fresh US sanctions, which have tightened restrictions on Russian crude exports.

Meanwhile, Oil prices could face additional headwinds due to the Federal Reserve's (Fed) cautious monetary policy approach. As widely anticipated, the Fed maintained its benchmark interest rate at 4.25%-4.50% during its January meeting. Elevated borrowing costs typically weigh on economic activity, subsequently reducing Oil demand.