U.S. oil prices bounced back to around $62 a barrel on Wednesday afternoon, more than erasing earlier losses after President Trump said he would pause his reciprocal tariffs for most countries for 90 days.
The commodity price, an indicator of economic confidence, has swung wildly over the past week, trading as high as $72 a barrel and as low as $55. Oil prices sank into the mid $50s early Wednesday after China said it would match Mr. Trump’s tariffs blow for blow.
Wednesday afternoon’s recovery put prices back around the level that many U.S. oil companies require to make money drilling new wells. But prices are still far lower than they were before Mr. Trump ratcheted up tariffs on nearly all countries with which the United States trades goods.
For now, many companies are waiting to see where prices settle before adjusting drilling or spending plans. As this week has demonstrated, commodity prices can be very volatile.
If prices fall further, to around $50 a barrel, U.S. oil production could decline by about 8 percent in a year, according to S&P Global Commodity Insights.
Peter Navarro, a trade adviser to Mr. Trump, has frequently cited the benefits of $50 a barrel oil, saying it would curb inflation.
Earnings are likely to fall as well, the Moody’s ratings agency said Wednesday, forecasting that profits will shrink by 10 percent or more across the global energy industry over the next 12 to 18 months. Moody’s previously expected profits would be flat compared with 2024.
The recent price slide has spooked U.S. oil executives, many of whom backed Mr. Trump’s campaign in hopes that he would open new areas for drilling and make it easier to secure permits for pipelines and other infrastructure.
“That’s a pretty expensive trade-off,” Dan Pickering, chief investment officer for Pickering Energy Partners, a Houston financial services firm, said on Friday, when oil was trading around $62 a barrel.
A broad group of U.S. oil and gas stocks was down about 15 percent in the past week.
It has been about four years since oil prices were as low as they have been in the past few days. The decline has yet to make a dent in the cost of gasoline, which averaged $3.24 a gallon on Wednesday, the same as last week, according to the AAA motor club.
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