Oil Steady as Oversupply Expectations, Trade War Outlook Worsen
Oil prices steadied after falling slightly on Tuesday as oversupply expectations and a trade war between the world’s two largest economies weighed on the demand outlook.
Brent crude traded below $65 a barrel after falling 0.3% in the previous session, with West Texas Intermediate nearing $61. The International Energy Agency cut its forecast for global oil consumption this year and next as trade tensions escalate. The supply build is likely more than enough to meet demand, it said in a monthly report.
The industry-funded American Petroleum Institute reported that U.S. national crude inventories rose by 2.4 million barrels last week, which would be the third straight increase if confirmed by official data due later Wednesday. However, the report indicated a drawdown at the Cushing, Oklahoma, storage hub and in fuel stocks.
Crude remained near a four-year low, after a sharp decline earlier this month caused by an onslaught of tariffs and counter-charges between the U.S. and its largest trading partners. Trump on Tuesday launched an investigation into the need for import taxes on critical minerals, while struggling to bridge this week’s trade differences with the European Union as White House officials said most U.S. tariffs imposed on the bloc would not be removed.
“While we may have seen a peak in the headline tariffs, the intensifying standoff between the U.S. and China is clouding global demand expectations,” said Charu Chanana, chief investment strategist for Saxo Markets Pte. “Uncertainty around retail action and supply chain disruptions is weighing on risk appetite and, in turn, on oil markets.”
Meanwhile, China’s economic growth showed surprising strength at the start of the year with a sharp increase in March, data released Wednesday showed, although the outlook remains murky due to the ongoing trade standoff with the U.S.
Source: Bloomberg
