Crude oil prices dropped on Monday morning, dampening last week’s surge, as concerns over global oil glut continue to grow. Meanwhile, there are also worries that a fresh U.S-China trade tension could slam the brakes on global economic recovery.
According to Reuters, U.S oil futures, West Texas Intermediate (WTI), dropped to as low as $18.32 per barrel. Also, Brent crude futures went down by about 1% to trade at $26.16 as at 5.45 am local time, compared to $26.44 per barrel which was its opening price on Monday last week. Recall that Brent climbed up about 23% last week, following three successive weeks of losses.
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In the meantime, U.S. President Donald Trump has threatened to increase tariffs on China as a strike back for the spread of the COVID-19 pandemic. The possibility of this development had stoked fears that another trade tension could cripple economic growth and limit the surge in oil prices.
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Note that stakeholders are continuing to monitor oil demands, as the global lockdowns against COVID-19 gradually are gradually lifted. While there is optimism that weak oil demand might have bottomed in some economic blocs, oil traders believe that it is will take at least a year for the demand of crude oil to return to pre-COVID-19 levels. Speaking to Bloomberg, Vandana Hari, the Founder of Vanda Insights, said:
“The coronavirus re-opening watch will remain center stage, and the latest weekly U.S. stockpiles and demand numbers will also be key in shaping market sentiment.”
