Oil prices fell on Wednesday as U.S. inventories soar and markets worry about a new China-U.S. trade war offset Trump’s renewed effort to weaken Iranian crude exports.
Brent crude futures were down 39 cents, or 0.51%, at $75.81 a barrel by 0427 GMT. WTI crude was down 26 cents, or 0.36%, at $72.44.
Oil traded in a wide range on Tuesday, with WTI down as much as 3% at one point and falling to its lowest level since Dec. 31 after China imposed tariffs on U.S. imports of oil, liquefied natural gas and coal in retaliation for U.S. tariffs on Chinese exports.
Trump’s pressure on Iran could support prices in the near term. Prices have rebounded after Trump revived the “maximum pressure” campaign he implemented in his first term to curb Iran’s nuclear program.
What dragged the market lower on Wednesday was stronger-than-expected US crude inventory data.
Crude oil inventories rose by 5.03 million barrels in the week ending January 31, according to figures from the American Petroleum Institute (API), according to market sources. Gasoline inventories rose by 5.43 million barrels and distillate inventories fell by 6.98 million barrels.
Official US government oil inventory data is due to be released at 1530 GMT on Wednesday.
Rising crude and fuel inventories in the world’s largest oil consumer point to weaker consumption and raise investors’ concerns about the impact of tariffs on the global economy and energy demand outlook.
The impact of China’s retaliatory tariffs on U.S. energy imports will be limited because global supply or demand for these commodities cannot be changed by China’s tariffs. Both countries can find alternative markets.
As for Iran, Trump on Tuesday revived his “maximum pressure” campaign against Iran, including efforts to reduce oil exports to zero to prevent Tehran from acquiring a nuclear weapon.
Meanwhile, Trump also has not shied away from saying he is open to a deal with Iran but signed a presidential memorandum reimposing his tough policy on Iran.
The pressure on Iran could be a factor that helps offset the downward trend in oil prices for now and provide room for further recovery, at least in the near term.
