Oil Falls as IEA Flags Trade War Risks to Global Demand
Oil fell after the International Energy Agency warned that consumption was under pressure from an escalating trade war, paring gains driven by U.S. inflation data.
Brent crude futures traded below $71 a barrel, following a 2% jump on Wednesday, the biggest in two weeks. Global oil supply is likely to exceed demand by about 600,000 barrels a day this year, the IEA said. The weak outlook echoed pessimism from top traders at a major oil and gas conference in Houston.
Crude got a boost from data showing U.S. consumer prices rose at the slowest pace in four months, although economists anticipate the trade war will also push up prices of goods such as food and clothing in coming months. Stock markets slipped again on Thursday. “We are still trying to understand how everything is going to play out, but clearly the market is very focused on how escalating trade tensions could affect global economic growth,” said Toril Bosoni, head of the IEA’s oil markets division. "What we're seeing is an unusual level of uncertainty, not just on the demand side with tariffs and trade negotiations changing day by day, but we're also seeing a lot of uncertainty on the supply side," he added, citing sanctions on major producers.
Crude has fallen from its mid-January highs, as risks from President Donald Trump's trade policies threaten a broader economic slowdown and higher volatility in broader markets.
Source:Bloomberg
