Oil Prices Settle Higher a Day After Sliding in DeepSeek-inspired Tech Rout

Oil futures finished higher on Tuesday, recouping a portion of the selloff from a day earlier tied to the emergence of Chinese artificial-intelligence startup DeepSeek. The company's low-cost AI model sent tech shares down sharply Monday, raising questions about the outlook for energy demand and the further development of AI. This led to a round of risk aversion that helped drag down crude oil prices.



On Monday, oil futures traded modestly lower after President Donald Trump paused steep retaliatory tariffs that he had threatened against Colombia, a key source of U.S. crude imports. The tariffs threatened to crimp an important flow of crude into the United States, with Colombia being the nation's fourth-largest supplier of crude, exporting a little more than 200,000 barrels a day. Colombia's key export grades are heavier crudes of the type used by U.S. Gulf Coast refiners, which could have disrupted these supplies and forced refiners to seek alternative sources, potentially increasing refining costs and driving up gasoline and diesel prices.

Oil futures may also be vulnerable to a negative overall market sentiment tied to a steep selloff in tech-related stocks sparked by the emergence of Chinese startup DeepSeek. The company's cheaply trained high-performing AI models have raised concerns about the outlook for AI-related spending, which could potentially reduce the demand for energy and oil in the long term.

In other energy dealings, natural-gas prices pulled back dramatically following some forecasts for a warming trend over the weekend. The potential for a warmup will put the focus back on prolific U.S. oil and gas production, which could lead to increased supply and potentially lower natural-gas prices.



The weather's impact on energy prices is a crucial factor to consider, as it can significantly influence demand for heating and cooling, as well as the production of renewable energy sources like solar and wind. As we move into the spring season, the focus will shift from heating demand to cooling demand, which could lead to changes in energy consumption patterns and potentially impact oil and natural-gas prices.

In conclusion, the emergence of DeepSeek and its impact on tech shares has raised questions about the outlook for energy demand, particularly for oil, in the long term. Trump's tariff threats on Colombia, Canada, and Mexico have significant geopolitical implications that could impact oil prices and global energy dynamics. Macroeconomic indicators such as GDP growth and inflation also play a crucial role in influencing oil prices and the broader energy market. As we move forward, investors should keep a close eye on these factors and their potential impact on energy prices and the broader market.