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.
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.
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.”