West Texas Intermediate (WTI) crude oil prices continued their downward slide on Thursday, extending the previous day’s pullback from the $72.00 mark, the highest level seen since February 21. The commodity experienced heavy follow-through selling during the Asian trading session but found some support near the $69.00 level, trading around $69.65. Despite the bounce, crude oil remained down more than 1% for the day.
Trade War Fears Weigh on Oil Demand Concerns about a global economic slowdown fueled by the escalating trade war, particularly the implementation of US President Donald Trump’s reciprocal tariffs, have dampened market sentiment. The widening trade conflict has sparked fears that it could significantly reduce global fuel demand. Additionally, a bearish report from the US Energy Information Administration (EIA) on Wednesday further pressured oil prices. The report revealed an unexpected increase in US crude inventories, with stocks rising by a hefty 6.2 million barrels last week, exacerbating the bearish outlook for crude oil.
US Economic Slowdown and Fed Rate-Cut Expectations Market sentiment has also shifted towards expectations of a US economic slowdown prompted by tariff impacts, leading some investors to believe that the Federal Reserve may soon resume its rate-cutting cycle. This shift has driven a sharp decline in US Treasury bond yields and pushed the US Dollar (USD) closer to its multi-month low reached in March. While a weaker USD typically supports USD-denominated commodities, including crude oil, the overall bearish sentiment in the market has kept oil prices under pressure.
Focus on US Economic Data and Trade Developments Looking ahead, traders are awaiting the release of key US economic data, including the Weekly Jobless Claims and the ISM Services PMI, which could provide insights into the strength of the US economy and influence USD price dynamics. However, the primary driver of crude oil prices remains trade developments, as market participants continue to monitor the evolving situation. The outcome of the ongoing trade conflict will likely play a significant role in determining the near-term trajectory for crude oil prices.
