On Wednesday, during the early European trading hours, West Texas Intermediate (WTI) oil prices continued their downward spiral for the second consecutive day, trading at approximately $57.70. This decline is primarily attributed to growing concerns about weakening global demand, which have been further exacerbated by the intensifying US – China trade war.
Trade War Woes Weigh on Oil Demand Prospects
Today, new tariffs imposed by US President Donald Trump came into effect. Among these, a particularly significant 104% duty on imports from China, the world’s largest oil consumer, has sent shockwaves through the market. The trade war between the US and China shows no signs of abating, despite the White House indicating a willingness to negotiate. Beijing has responded resolutely, vowing to “fight to the end,” suggesting that this trade dispute could drag on.
Ye Lin, the Vice President of Oil Commodity Markets at Rystad Energy, told Reuters that if the trade war persists, China’s daily oil demand growth of 50,000 to 100,000 barrels is at risk. However, Ye Lin also noted that a robust domestic stimulus in China could potentially offset some of these losses.
While President Trump has expressed openness to resolving trade issues through dialogue, raising hopes for de – escalation, the current situation remains uncertain. Adding to this uncertainty, US Treasury Secretary Scott Bessent revealed that nearly 70 countries have reached out to the administration to discuss tariff measures.
OPEC+ Production Boost Adds to Downward Pressure
Adding insult to injury for WTI oil prices, the OPEC+ alliance, which includes both OPEC members and partners such as Russia, has announced plans to increase production by 411,000 barrels per day in May. This planned production boost has raised concerns that the oil market could soon shift into a surplus, further depressing prices.
Inventory Data Offers a Glimmer of Hope
On a somewhat positive note, data from the American Petroleum Institute (API) showed that US crude oil inventories fell by 1.057 million barrels last week. This decline partially reversed the previous week’s increase of 6.037 million barrels. However, given the broader market trends, this positive inventory data has so far failed to halt the downward slide of WTI oil prices.
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