Intel stock extends gains after report of possible U.S. government stake
Investing.com--Oil prices fell Wednesday as US-China tariff tensions and rising US stockpiles kept traders cautious, while President Donald Trump’s call for tougher enforcement on Iran provided some support.
At 08:50 ET (13:50 GMT), Brent Oil Futures fell 1.1% to $75.35 a barrel, and Crude Oil WTI Futures dropped 1.1% to $71.94 a barrel.
“It was a session of two halves for oil yesterday (Tuesday) with prices initially weaker on the back of China’s retaliatory tariffs against the US. However, a tougher US stance on Iran saw the market claw back these losses later in the session,” ING analysts said in a note.
US-China trade tensions weigh
Prices faced headwinds after China retaliated against US tariffs by imposing duties on US imports, including liquefied natural gas, coal, crude oil, and farm equipment.
These developments have introduced uncertainty into the market, as traders assess the potential impact on global oil demand.
"However, with these tariffs only coming into force on 10 February, there is still room for a deal, although there are reports that President Trump is in no rush to talk to President Xi," said analysts at ING, in a note. "The tariffs on oil and LNG affect a relatively small share of Chinese imports."
US inventories jump above expectations- API
The American Petroleum Institute released its latest weekly crude oil inventory report on Tuesday, indicating a build of 5.025 million barrels for the week ending January 31.
This increase surpassed market expectations, which had forecasted stockpiles of 3.170 million barrels, and also sharply exceeded the previous week’s build of 2.860 million barrels.
The consistent rise in crude oil inventories over the past three weeks suggests a potential softening in demand or an oversupply in the market.
Markets will closely monitor the U.S. Energy Information Administration’s weekly report due later in the day, to confirm these trends.
That said, data released earlier Wednesday showed that US private payrolls growth picked up in January, indicating that the US economy remains in reasonable health.
Private payrolls increased by 183,000 jobs last month after an upwardly revised 176,000 rise in December, according to the ADP National Employment Report. Economists polled by Reuters had forecast private employment advancing by 150,000 following a previously reported 122,000 gain in December.
US-China trade tensions weigh
Meanwhile, support emerged as President Trump signed a directive reinstating "maximum economic pressure" on Iran, including stricter enforcement of oil export sanctions and measures to drive Tehran’s shipments "to zero".
This action is anticipated to create a supply gap in the market, potentially leading to upward pressure on oil prices.
“Stricter enforcement could see as much as 1m b/d of supply at risk. However, reduced flows from Iran will not help in lowering oil prices, something that President Trump is very keen to achieve, ING analysts added.
Additionally, the Organization of the Petroleum Exporting Countries and allies, or OPEC+, is likely to adhere to current plans to raise output gradually from April, further underscoring an oversupply scenario.
(Ayushman Ojha contributed to this article.)