Oil slips as traders digest Trump tariff reprieve, plan to boost US oil output

Oil prices fell on Tuesday as investors assessed U.S. President Donald Trump's plans to apply new tariffs later than expected while boosting oil and gas production in the United States.

Brent crude futures were down 65 cents, or 0.81%, to $79.5 per barrel at 0909 GMT. U.S. West Texas Intermediate crude futures were down by $1.15, or 1.48%, at $76.73. There was no settlement in the U.S. market on Monday due to a public holiday.

"The initial sense of relief that trade measures weren't an immediate focus on Trump's 'Day 1' was quickly offset by reports of 25% tariffs on Mexico and Canada as early as February, which saw risk sentiments turn," said Yeap Jun Rong, market strategist at IG.

Trump did not impose any sweeping new trade measures right after his inauguration on Monday, but told federal agencies to investigate unfair trade practices by other countries.

He said he was thinking of imposing 25% tariffs on imports from Canada and Mexico from Feb. 1, rather than on his first day in office as previously promised.

The tariff reprieve initially helped push oil prices down, but duties on Canadian crude could eventually drive the market higher.

Also pressuring prices on Monday, was a stronger U.S. dollar, as its strengthening makes oil more expensive for holders of other currencies.

"The current weakness is most probably Trump and dollar-related," said PVM analyst Tamas Varga.

The dollar rebounded after Trump's comments on imposing tariffs against Mexico and Canada, Varga said, noting that the dollar's strength is negatively impacting oil prices.

Trump on Monday laid out an extensive plan to accelerate oil, gas and power permitting in order to maximise already record high U.S. energy production.

The U.S. president also said his administration would "probably" stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.

Trump also promised to refill strategic reserves, a move that could be bullish for oil prices by boosting demand for U.S. crude oil.

(Reporting by Gabrielle Ng, Colleen Howe and Enes Tunagur; editing by Sonali Paul and Jason Neely)