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Oil Prices Decline Amid Rising US Crude Inventories and Trade Tensions
US crude stocks rise unexpectedly as Sino-US trade tensions impact market, while Trump's renewed sanctions on Iran provide mixed market response.
Oil prices fell on Wednesday as concerns over rising US crude inventories and the escalating Sino-US trade tensions outweighed market reactions to President Donald Trump’s renewed push to reduce Iranian crude exports.
By 7:27 a.m. Saudi time, Brent crude futures were down by 39 cents, or 0.51 percent, at $75.81 per barrel, while US West Texas Intermediate (WTI) crude lost 26 cents, or 0.36 percent, to $72.44. The previous day, WTI saw a sharp 3 percent drop, marking its lowest level since December 31, following China's announcement of new tariffs on US oil, liquefied natural gas, and coal in retaliation to US levies on Chinese exports.
Prices rebounded briefly after Trump revived the 'maximum pressure' campaign against Iran, aiming to curb the nation's nuclear program by reducing its crude exports.
However, the market's negative sentiment intensified on Wednesday due to higher-than-expected US crude inventories.
According to the American Petroleum Institute, crude stocks increased by 5.03 million barrels for the week ending January 31. Gasoline inventories rose by 5.43 million barrels, while distillate stocks saw a decrease of 6.98 million barrels.The unexpected rise in US crude and gasoline stocks signaled weak consumption in the world’s largest oil consumer, further compounded by concerns about the trade war’s potential impact on global economic and energy demand.
Despite these concerns, analysts from Goldman Sachs noted that the effect of China’s retaliatory tariffs would likely be limited, as both countries could find alternative markets for their respective energy exports.Meanwhile, President Trump’s re-imposition of tough sanctions on Iran’s oil exports could affect around 1.5 million barrels per day, according to analysts at ANZ.
While some market observers see the clampdown on Iran as potentially stabilizing oil prices in the short term, the overall sentiment remains bearish due to ongoing global economic uncertainties.
Official US government oil inventory data is due to be released later on Wednesday.
By 7:27 a.m. Saudi time, Brent crude futures were down by 39 cents, or 0.51 percent, at $75.81 per barrel, while US West Texas Intermediate (WTI) crude lost 26 cents, or 0.36 percent, to $72.44. The previous day, WTI saw a sharp 3 percent drop, marking its lowest level since December 31, following China's announcement of new tariffs on US oil, liquefied natural gas, and coal in retaliation to US levies on Chinese exports.
Prices rebounded briefly after Trump revived the 'maximum pressure' campaign against Iran, aiming to curb the nation's nuclear program by reducing its crude exports.
However, the market's negative sentiment intensified on Wednesday due to higher-than-expected US crude inventories.
According to the American Petroleum Institute, crude stocks increased by 5.03 million barrels for the week ending January 31. Gasoline inventories rose by 5.43 million barrels, while distillate stocks saw a decrease of 6.98 million barrels.The unexpected rise in US crude and gasoline stocks signaled weak consumption in the world’s largest oil consumer, further compounded by concerns about the trade war’s potential impact on global economic and energy demand.
Despite these concerns, analysts from Goldman Sachs noted that the effect of China’s retaliatory tariffs would likely be limited, as both countries could find alternative markets for their respective energy exports.Meanwhile, President Trump’s re-imposition of tough sanctions on Iran’s oil exports could affect around 1.5 million barrels per day, according to analysts at ANZ.
While some market observers see the clampdown on Iran as potentially stabilizing oil prices in the short term, the overall sentiment remains bearish due to ongoing global economic uncertainties.
Official US government oil inventory data is due to be released later on Wednesday.
