WTI drops to $57.70 on fears of weakening global demand

The benchmark West Texas Intermediate (WTI) crude oil continues to decline for the second consecutive day, trading near $57.70 during the European session on Wednesday, driven by mounting concerns over weakening global demand, exacerbated by escalating tensions in the ongoing US-China trade war.

New tariffs imposed by US President Donald Trump took effect on Wednesday, including a steep 104% duty on imports from China — the world’s largest oil consumer.

While the White House has signaled a willingness to engage in trade negotiations, Beijing has responded firmly, vowing to “fight to the end,” suggesting that the dispute could be drawn out.

According to Reuters, Ye Lin, Vice President of Oil Commodity Markets at Rystad Energy, said that, “China’s 50,000 to 100,000 barrels per day of oil demand growth is at risk if the trade war persists. However, a robust domestic stimulus could help offset some of the losses.”

Despite the tension, President Trump has expressed openness to resolving trade issues through dialogue, raising hopes for a potential de-escalation.

Supporting this sentiment, US Treasury Secretary Scott Bessent noted that nearly 70 countries have contacted the administration to discuss tariff measures.

Adding to the downward pressure on crude oil, the OPEC+ alliance — which includes OPEC members and partners like Russia — plans to increase output by 411,000 barrels per day in May. The production boost raises concerns that the market could shift into surplus.

Meanwhile, data from the American Petroleum Institute (API) showed that US crude oil inventories fell by 1.057 million barrels last week, partially reversing the previous week’s build of 6.037 million barrels.

(Source: OANDA)