Oil prices in New York steadied after plunging into the $60s-per-barrel range, as growing concerns over a weakening global economy dampened expectations for energy demand. West Texas Intermediate (WTI) crude hovered near $69 a barrel after a 2% decline on Tuesday, marking its lowest close since mid-December. Brent crude stood at approximately $73 a barrel.
The downward pressure on prices was intensified by a disappointing US consumer confidence report, which recorded its sharpest drop since 2021. The decline fueled fears over the broader economic outlook, exacerbated by trade tensions linked to former President Donald Trump’s tariff policies.
Crude prices have slumped nearly 5% this month as investor concerns grew over trade-related uncertainties. Trump’s aggressive tariff measures have added to market anxiety, especially as oil traders were already grappling with weak demand signals from China. At the same time, supply-side factors have also been in focus, including the potential restart of pipeline flows from Iraq’s Kurdistan region, which the US has advocated for.
The confluence of these negative factors has overshadowed the potential bullish impact of fresh sanctions on Iranian oil exports and OPEC+ expectations. Despite these sanctions, OPEC+ is anticipated to delay plans to increase oil production in stages starting in April, marking the fourth consecutive delay to such a move.
In a note, Morgan Stanley analysts, including Martijn Rats, warned that the ongoing tariff and counter-tariff measures could have a significant impact on the oil-intensive sectors of the economy, creating additional uncertainty regarding future demand. The analysts also forecast that OPEC is likely to extend its current production quotas beyond April, maintaining stable output levels.
Meanwhile, the American Petroleum Institute (API) released mixed data on US commercial oil inventories. National stockpiles decreased by 600,000 barrels last week, although levels at the critical Cushing, Oklahoma storage hub rose by a notable 1.2 million barrels.
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