Photo: Getty images
Global oil prices suffered another drop on Wednesday, 5 February, due to rising US stockpiles and fears of an escalating trade war between Washington and Beijing. This offset the efforts of the Donald Trump administration to block Iranian crude oil exports. This was reported by Reuters.
Brent futures fell 39 cents, or 0.51%, to $75.81 per barrel. The price of US West Texas Intermediate crude fell 26 cents, or 0.36%, to $72.44. The day before, on 4 February, WTI quotes lost 3%, reaching their lowest level since 31 December after China announced duties on imports of US energy resources. Not only oil, but also liquefied natural gas and coal were hit.
Market concerns have also increased the growth of crude oil stocks in the United States. According to sources citing data from the American Petroleum Institute, they increased by 5.03 million barrels in the week ended 31 January. Gasoline stocks rose by 5.43 million barrels, while distillate stocks fell by 6.98 million barrels.
IG market strategist Jun Rong Yep notes that the accumulation of inventories in the world’s largest energy consumer indicates weakening demand, which only deepens investors’ concerns.
Meanwhile, Goldman Sachs analysts reassure the market that the impact of Chinese duties on US energy imports will be limited, as global markets remain flexible and countries will be able to find alternative suppliers and consumers.
Special attention is focused on the policy of Donald Trump, who on Tuesday announced the resumption of his strategy of “maximum pressure” on Iran. The US President signed a memorandum that effectively returns Washington to a tough policy towards Tehran, aimed at limiting Iranian oil exports to zero. According to ANZ analysts, this step could affect the 1.5 million barrels of oil that Iran exports daily.
Official data on US oil inventories are expected to be released later on Wednesday, which may further affect market sentiment.
