Oil Prices Slide Nearly 3% Amid US-China Trade War And Demand Fears
Oil prices tumbled nearly 3% on Tuesday as persistent concerns over weakening global energy demand and escalating US-China trade tensions weighed heavily on investor sentiment.
Brent crude futures dropped 2.8% to just below US$64 per barrel by 4pm US Central time, while West Texas Intermediate (WTI) crude slid 3% to US$60 per barrel.
Analysts from ING, Ewa Manthey and Warren Patterson, said markets remain anxious that the ongoing trade war—spearheaded by the US—could significantly dent global energy demand. 'The latest release of US economic data signalled the slowing of the economy, while China pushed back against US tariffs, once again raising trade war concerns,' they said in a note.
Adding to the bearish sentiment, reports suggest OPEC+ may move forward with production increases at its upcoming meeting next week. 'Downside risks for oil prices continue to persist as OPEC+ plans to revive production,' the ING analysts added.
Energy consultancy PVM Oil Associates echoed similar concerns, stating that prolonged US-China tensions, coupled with stalled trade negotiations, are fuelling demand uncertainty. It also pointed to political risks involving Canada, noting that the recent electoral victory of the Liberal party led by former Bank of England governor Mark Carney—reportedly with inadvertent help from the US president—could spark renewed tensions with Washington.
Further pressuring prices, refinery operations in the Iberian Peninsula were disrupted due to a massive power outage across Spain and Portugal, leading to temporary shutdowns that dented short-term crude demand.
Despite the decline in oil, US equities edged higher on Tuesday, though gains remained under 1% as markets digested mixed economic data and corporate earnings.
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