Oil prices slid on Wednesday as rising stockpiles in the U.S. and market worries about a new Sino-U.S. trade war offset President Donald Trump’s renewed push to eliminate Iranian crude exports.
Brent crude futures were down 39 cents, or 0.51%, at $75.81 a barrel by 0427 GMT. U.S. West Texas Intermediate crude (WTI) lost 26 cents, or 0.36%, to $72.44.
Oil on Tuesday traded in a wide range, with WTI falling at one point by 3%, its lowest since Dec. 31, after China announced tariffs on U.S. imports of oil, liquefied natural gas and coal in retaliation to U.S. levies on Chinese exports.
Prices rebounded, however, after Trump restored the “maximum pressure” campaign on Iran to curtail its nuclear programme he enacted in his first term that cut Iranian crude exports to zero.
Weighing down the market on Wednesday was the higher-than-expected U.S. crude inventories data overnight, said Jun Rong Yeap, a market strategist at IG.
Crude stocks rose by 5.03 million barrels in the week ended Jan. 31, according to market sources, citing American Petroleum Institute figures.
Gasoline inventories rose by 5.43 million barrels, and distillate stocks fell by 6.98 million barrels, the API reported, according to the sources.
Official U.S. government oil inventory data is due to be released at 1530 GMT on Wednesday.
Rising crude and fuel stockpiles in the world’s biggest oil consumer signal consumption weakness, adding to investor worries about the impact of tarrifs on the global economic and energy demand outlooks.
The impact of China’s retaliatory tariffs on U.S. energy imports will be limited “given that neither global supply nor demand of these commodities are changed by China’s tariffs,” analysts at Goldman Sachs said in a note on Tuesday.
Both countries will be able to find alternative markets, the note said.
As for Iran, Trump on Tuesday restored his “maximum pressure” campaign on Iran that includes efforts to drive its oil exports down to zero in order to stop Tehran from obtaining a nuclear weapon.
While Trump said he was open to a deal with Iran, he signed a presidential memorandum re-imposing Washington’s tough policy on Iran. The plan could impact about 1.5 million barrels per day of oil that the country exports, analysts at ANZ said on Wednesday, citing shiptracking data.
“The clampdown on Iran may be what is needed to stabilise bearish sentiments for oil prices for now and there may room for further recovery, at least in the near term,” said IG’s Yeap.
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