The prices of the major crude oil grades went down by about 2 per cent on Tuesday as investors braced for plans by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to boost output.
Also, worries that US President Donald Trump’s tariffs would hit the global economy and slow demand for the fuel brought down Brent crude futures by $1.61 or 2.4 per cent to $64.25 per barrel as the US West Texas Intermediate (WTI) crude futures dropped $1.63 or 2.6 per cent to settle at $60.42.
There are increasing fears that President Trump’s aggressive tariffs on imports into the US have made it probable that the global economy will fall into recession this year.
China, hit with the steepest tariffs, has responded with its levies on US imports, stoking a trade war between the top two oil-consuming nations.
The Asian giant appears to be adamant, denying President Trump statements that negotiations were taking place, and calling on the US to remove the tariffs.
Analysts have sharply lowered their oil demand and price forecasts due to the deadlock.
Evidence have already started propping up with the US trade deficit in goods widened to a record high in March as businesses ramped up efforts to bring in merchandise ahead of President Trump’s sweeping tariffs, suggesting trade was a large drag on economic growth in the first quarter.
Also, there have been announcement of job cuts, while some other companies dependent on oil in their businesses continue to delay expected events.
Several OPEC+ members will suggest an acceleration of output hikes for a second straight month in June.
Market analysts warned that another production hike from OPEC+ could not happen at a worse time when sentiment is already weak.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose 3.76 million barrels in the week ending April 25, after analysts had estimated a much smaller 390,000-barrel build. The API reported a 4.565 million barrel dip in the prior week.
So far this year, crude oil inventories are up more than 23 million barrels, according to Oilprice calculations of API data.