WTI slumps below $57.25 as escalating US-China trade tensions spark demand fears

WTI price tumbles to near $57.25 in Wednesday’s early Asian session.

Fears of a potential US recession and an escalating trade war between the US and China weigh on the WTI price. 

Crude oil stockpiles in the US fell by 1.057 million barrels last week, noted API. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $57.25 during the early Asian session on Wednesday. The WTI price extends the decline near a four-year low due to US President Donald Trump’s trade war rhetoric, growing recession fears in the US and weak global demand.

The Trump administration will impose a 104% tariff on China beginning at 04.01 GMT on Wednesday, adding 50% more to tariffs after Beijing failed to lift its retaliatory tariffs on US goods by a noon deadline on Tuesday set by Trump. Beijing vowed not to bow to what it called US blackmail after Trump threatened the additional 50% tariff on Chinese goods if the country did not lift its 34% retaliatory tariff.

China's Commerce Ministry said the country would fight to the end, raising concerns about a global economic downturn. This, in turn, exerts some selling pressure on the WTI price. 

A surprise output increase by the Organisation of Petroleum Exporting Countries and allies (OPEC+) contributes to the WTI’s downside. OPEC+ announced plans to increase output, aiming to return 411,000 barrels per day (bpd) to the market in May, up from the previously planned 135,000 bpd. 

The decline in crude oil inventories might provide some support to the crude oil prices. The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending April 4 fell by 1.057 million barrels, compared to an increase of 6.037 million barrels in the previous week. So far this year, crude oil inventories have climbed nearly 22 million barrels.