Oil falls in price due to rising US stockpiles

5 February 11:30

Oil prices declined on Wednesday, February 5, due to rising US inventories and market concerns about a possible new trade war between the US and China. This offset renewed pressure from US President Donald Trump to eliminate Iranian oil exports, according to Komersant ukrainskyi with reference to Reuters.

Futures for Brent crude oil fell by 21 cents (0.28%) to $75.99 per barrel as of nine am Kyiv time. U.S. West Texas Intermediate (WTI) lost 11 cents (0.15%), dropping to $72.59.

The day before, on Tuesday, oil prices fluctuated in a wide range, with WTI at one point falling by 3% to its lowest level since December 31, after China announced the introduction of tariffs on imports of oil, liquefied natural gas and coal from the United States in response to US duties on Chinese exports.

However, prices recovered after Trump resumed his “maximum pressure” campaign on Iran to curb its nuclear program, which he introduced during his first term and which reduced Iranian oil exports to zero.

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The decisive factor is the US oil reserves

According to Jun Rong Yep, market strategist at IG, the market was pressured on Wednesday by higher-than-expected data on US oil inventories. According to market sources citing figures from the American Petroleum Institute, crude oil inventories rose by 5.03 million barrels in the week ended January 31.

Gasoline stocks increased by 5.43 million barrels, while distillate stocks decreased by 6.98 million barrels. Official US government data on oil inventories are due out today.

The rise in oil and fuel stocks in the world’s largest oil consumer indicates weak consumption, which increases investor concerns about the impact of tariffs on global economic prospects and energy demand.

China and Iran

Goldman Sachs analysts on Tuesday noted that the impact of China’s retaliatory duties on energy imports from the United States will be limited “as neither global supply nor demand for these commodities is affected by Chinese duties.” Both countries will be able to find alternative markets.

Regarding Iran, Trump on Tuesday resumed his “maximum pressure” campaign, which includes efforts to reduce oil exports from the country to zero. The goal of these measures is to stop Tehran’s work on nuclear weapons. Although Trump declared his readiness to reach a deal with Iran, he signed a presidential memorandum on the resumption of the US tough policy towards this country. According to ANZ analysts, citing ship tracking data, this plan could affect approximately 1.5 million barrels of oil per day exported by Iran.

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Остафійчук Ярослав
Editor