On Wednesday, U.S. crude oil futures fell by 2.3%, mainly due to increased U.S. crude inventories and ongoing escalation of the U.S.-China trade war, which has heightened market concerns. West Texas Intermediate (WTI) crude for March delivery on the New York Mercantile Exchange dropped $1.67, closing at $71.03 a barrel.
The volatility in the crude oil market has increased, with WTI crude dropping 3% on Tuesday to its lowest level since December 31 of the previous year. This was triggered by China's announcement to impose tariffs on U.S. imports of oil, liquefied natural gas, and coal, in response to U.S. tariffs on Chinese goods. This decision has sparked concerns about weak global demand.
However, oil prices temporarily rebounded after U.S. President Trump announced the reinstatement of the "maximum pressure" policy on Iran. Trump plans to curb Iran's crude oil exports, aiming to reduce them to near zero. Nonetheless, worries about global economic slowdown have not dissipated, particularly as trade tensions between the U.S. and China might suppress oil demand, putting downward pressure on prices.
Additionally, the increase in U.S. crude oil inventories has further intensified market concerns. With inventories continuously rising, investors are increasingly worried about oversupply and weak global demand, weighing on oil prices. Overall, attention to the supply and demand dynamics of crude oil remains the main factor affecting oil price trends.
