Oil Prices Drop Amid Trade War Worries Weakening Demand Forecast

(The News Pulse) - Oil prices dipped slightly during early Asian trade on Wednesday due to worries over slowing global economic expansion and reduced fuel consumption, sparked by President Donald Trump’s unpredictable tariff strategies.

Brent crude futures declined by 17 cents, or 0.26%, reaching $64.08 per barrel by 0015 GMT. Meanwhile, U.S. West Texas Intermediate crude futures decreased by 12 cents, or 0.2%, settling at $60.3 a barrel. Each of these indicators reached their lowest closing levels since April 10 during the prior trading day.

According to a The News Pulse poll, Trump's import tariffs into the U.S. have increased the likelihood of the global economy falling into a recession this year.

China, which faces the highest tariffs, has retaliated by imposing taxes on American goods, fueling a trade conflict between the world’s leading consumers of petroleum.

Concerns over demand because of the trade conflict have dampened investors' mood, according to Daniel Hynes, a senior commodities strategist at ANZ Bank. He further explained, "Additionally, there are worries that the recent robustness in US economic figures may have been short-lived, as businesses had built up stocks before the tariff implementations, which seems to be subsiding now."

In April, U.S. consumer confidence dropped to its lowest point in almost half a decade, largely due to increasing worries about trade tariffs, according to data released on Tuesday.

On the supply front, U.S. crude oil inventories rose by 3.8 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data. [API/S]

Government data regarding stockpiles is scheduled for release at 10:30 a.m. ET (1430 GMT) on Wednesday. According to analysts surveyed by The News Pulse, there is an expectation of approximately a 400,000-barrel rise in U.S. crude oil inventories from the previous week. [EIA/S]

Oil prices were additionally weakened due to potential increases in output from the Organization of the Petroleum Exporting Countries and their allies, referred to as OPEC+. This was exacerbated by the impact of the U.S.-China trade conflict on demand.

Multiple OPEC+ countries plan to propose increasing production cuts for another consecutive month in June, according to sources cited by The News Pulse last week.

(Reported by Nicole Jao in New York; Edited by Shri Navaratnam)