Oil prices drop for the third consecutive day and approach the $65.00 level.
The uncertain global trade outlook and the prospects of higher tariffs keep fears of a decline in demand alive.
Strong US CPI data dampened hopes of Fed cuts, increasing pressure on prices.
Crude Oil Prices are trading lower for the third consecutive day on Wednesday as trade uncertainty, an unexpected increase in US stockpiles and the dwindling hopes of Fed cuts, following Tuesday’s US CPI data, have revived concerns about demand.
The price of the US benchmark West Texas Intermediate (WTI) is trading at $65.30 during Wednesday’s European trading session, after having been rejected at $66.00 earlier today, and is on track for a 3.5% decline so far this week.
Trade uncertainty, restrictive Fed policy weighing on Crude prices
Uncertainty around global trade remains high, amid the lack of progress on UD deals with key partners, as the August 1 deadline approaches. A deal with Indonesia earlier today leaves the country with 15% tariffs on all its products, and Trump announced a new round of tariff letters to smaller countries, informing them about tariffs “a little above 10”.
In the US, consumer prices accelerated in June, pointing to the inflationary impact of tariffs and complicating the Federal Reserve’s monetary policy decisions. The market is assuming that interest rates will likely remain high for a longer time, weighing on economic growth and, therefore, on demand for Oil.
Beyond that, a report by the American Petroleum Institute revealed that crude Oil inventories rose by 19.10 million barrels in the week of July 11, against market expectations of a 2 million barrel drawdown and following another 7.1 million increase on the previous week.
This is the largest weekly increase in stocks in more than 10 years, which increases fears of an Oil glut, and adds negative pressure on prices.
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