OIL FUTURES: Crude drops as US Court temporarily reinstates Trump tariffs

Crude oil futures fell in mid-afternoon Asian trade on May 30 after the US Court of Appeals temporarily blocked the US Court of International Trade's ruling that deemed Trump's tariffs illegal, dampening market sentiment.

At 2:45 pm Singapore time (0645 GMT), the ICE July Brent futures contract was down 23 cents/b (0.36%) from the previous close at $63.92/b, while the NYMEX July light sweet crude contract was down 23 cents/b (0.38%) from the previous close at $60.71/b.

Crude oil futures prices slumped after the US Court of Appeals temporarily reinstated US President Donald Trump's 'Liberation Day' tariffs while the appellate judges mull over the case, reversing gains garnered from the International Trade Court's injunction against said tariffs on May 29.

Plaintiffs were given until June 5 to respond, and the Trump administration until June 9.

"What began as early trade optimism yesterday -- triggered by the US Court of International Trade deeming Trump's tariffs illegal -- turned out to be too good to be true. The initial ruling that had canceled the tariffs is now effectively on hold," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Analysts noted that optimism from the International Trade Court's ruling was short-lived, as concerns over a potential economic slowdown continued to weigh on crude oil demand.

"Uncertainty has surged -- no one is quite sure what's legal and what's not anymore. It's under this heavy cloud of uncertainty that the early risk-on rally yesterday fizzled out," Ozkardeskaya added.

On the supply side, the upcoming OPEC+ meeting on May 31 is drawing attention, with some analysts expecting the association to increase production by 411,000 b/d starting in July.

"That would be about 1% of current production -- [with OPEC+] citing rising demand as justification. However, the official statement feels thin, given waning demand prospects amid global trade tensions," Ozkardeskaya said.

Some, however, noted that they expect OPEC+ to advance discussions on voluntary cutbacks in crude oil production.

"There seems to be internal disagreement with Kazakhstan. Kazakhstan has struggled to comply with reduced quotas and has explicitly communicated its unwillingness to cut production to OPEC+," said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Despite this, US crude oil prices remain slightly above the $60/b level this week, and analysts noted that a drop of prices by $10/b in the second half of the year cannot be ruled out if trade tensions persist.

Meanwhile, the market is also anticipating the US April Personal Consumption Expenditures data -- the Federal Reserve's preferred inflation gauge -- due later on May 30.

"Today's PCE data could surprise to the downside or meet expectations, but the full effects of the 'tariff tsunami' likely haven't reached shore yet. The data will need to be taken with a pinch of salt," Ozkardeskaya said.

Dubai crude

Dubai crude swaps and intermonth spreads were mixed in mid-afternoon Asian trading on May 30 from the previous close.

The July Dubai swap was pegged at $61.83/b at 2:00 pm Singapore time (0600 GMT), down by $1.83/b (2.87%) from the previous Asian market close.

The June-July Dubai swap intermonth spread was pegged at 32 cents/b, narrower by 3 cents/b over the same period, and the July-August Dubai swap intermonth spread was pegged at 41 cents/b, unchanged over the same period.

The July Brent-Dubai exchange of futures for swaps was pegged at $2.13/b, wider by 19 cents/b over the same period.