Oil Retreats as IEA Says Trade War Poses Risks to Global Demand
Oil fell as signs that US President Donald Trump’s escalating trade war may hamper economic growth contributed to a bearish outlook for global demand.
West Texas Intermediate slid 1.7% to settle below $67 a barrel, following a 2.2% jump on Wednesday that was its biggest gain in almost two weeks. Global oil supply is likely to exceed demand by about 600,000 barrels a day this year as tariffs weaken macroeconomic conditions, the International Energy Agency said. US equities also dropped on uncertainty about the effects of the trade war.
Crude has tumbled from its mid-January highs as the Trump administration’s trade policies threaten a wider economic slowdown and reduce the appeal of riskier assets. On the supply side, an OPEC+ plan to boost production and the prospect of Russian barrels returning to the market also are weighing on prices. Oil briefly swooned to intraday lows after Russian President Vladimir Putin said he’s ready to agree to a ceasefire with Ukraine if it leads to long-lasting peace.
Bearish economic projections like the Federal Reserve Bank of Atlanta’s expectation that the US economy will decline at a 1.5% annualized rate this quarter are threatening prices, according to John Kilduff, a partner at Again Capital.
“A negative US economic outlook is problematic for this market,” he said. “That’s really why we’re down near the lower end of the range here at $66. If we break that, we are going to go back down into the $50s.”
US wholesale inflation was unchanged in February amid declining trade margins, though details were less favorable for the Federal Reserve’s preferred inflation gauge.
Top traders echoed expectations of supply outstripping demand at S&P Global’s CERAWeek conference in Houston, warning that prices could slide lower as more barrels come onto the market.
WTI for April delivery fell 1.7% to settle at $66.55 a barrel in New York.
Brent for May settlement slid 1.5% to settle at $69.88 a barrel.
Source : Bloomberg
