(RTTNews) – Crude oil declined on Monday as oversupply concerns and fears of a slowdown by the global economy brought on by US tariffs continue to play out.
Today, WTI Crude Oil was last seen trading, down by $1.06 (or 1.57%), at at $66.27 per barrel.
Yesterday, the OPEC+ alliance agreed to hike output by 547,000 barrels per day for September on top of the planned 548,000 bpd hike for August and the earlier July’s target of 411,000 bpd.
As a result, fears of oversupply has gripped oil traders.
Coupled with this, prolonged trade war tension has also led traders to guess that demand for oil may decrease in the coming days as a high-tariff trade landscape could reduce energy consumption, bringing down oil prices. Of note, post August 1, several major US trading partners have been hit by huge tariffs that are set to take effect on August 7.
All these factors put downward pressure on the price of crude oil.
Last Friday’s Labor Department data revealed that employers added only 73,000 jobs in July; well below the market expectation of 115,000 jobs.
Against the backdrop of this data showing a weakening job market, traders feel that the US Fed has to cut rates in September and perhaps in December. The path for a streamlined global economy now looks cloudy.
In a related big move, Trump fired the commissioner for the Bureau of Labor Statistics, accusing the department of rigging the job numbers.
Today, data released by the US Commerce Department revealed that new orders for US manufactured goods fell 4.8% in June following a revised 8.3% surge in May, close in line with market expectations for a 4.9% slump.
Last week, the Trump administration gave the US oil major Chevron a sanction exemption for its operations in Venezuela that allows the giant now to pump more oil.
A few days before, Trump had given a deadline of 50 days to Russia which he later reduced to 10-12 days for the country to end its 3-plus-year war with Ukraine or face high tariffs along with a threat of “secondary sanctions” on countries buying oil and energy from Russia; notably, India and China.
Today, Trump reiterated his threat to India, stating that he would “substantially raise tariffs” on Indian exports if it purchases crude oil from Russia.
Prior to this, on July 18, the EU hit Russia with its 18th package of sanctions with a central clause aimed to lower the cap on Russian oil price from $60 to roughly $47.
Despite threats from the EU and the US, so far the Russian government has not shown any sign of willingness to end its conflict with Ukraine.
Analysts feel that even a symbolic tariff hike could spook third-party financing and insurance, complicating access to discounted cargoes.
Despite projections for slow demand in the wake of ongoing US tariff war and oversupply concerns due to OPEC+ cartel’s decision to increase output, the Trump-Putin showdown has slightly kept the dial in favor of oil prices.
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