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Crude Oil Continues to Decline Over Trade War Uncertainty – Supply Risks Support Prices

For several days now, crude oil prices have been in a tug-of-war like situation between the rising uncertainty over US-China trade tensions and fear of ongoing supply cuts by OPEC+ members. On Tuesday, however, the trade war took over and caused WTI prices to fall by 0.7% to touch $58.70 per barrel.

At the time of writing, WTI crude oil prices have fallen further to $58.45 per barrel. Investors are worried about how the trade war can create a slowdown in global economic growth, dragging down demand for oil worldwide.

So far, according to data released by the EIA, global demand for oil remains unchanged at a little over 100 million bpd on average. However, an imminent economic slowdown could see this figure shrinking in the near future.

Even as the risks of a slowdown affect global oil markets, crude oil prices are unable to fall away sharply owing to supply risks. Since January 2019, OPEC+ members had agreed to restrict crude production by 1.2 million bpd to curb weakness in oil prices. While this move was set to last till June, there are rumors that OPEC and other oil-producing allies may choose to extend this for a longer period of time.

Furthermore, recent geopolitical tensions in the Middle East due to rising US-Iran hostility and the likelihood of US imposing more sanctions on Venezuela are also keeping oil prices supported.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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