WTI crude price drops below $70 as Trump tariffs revive demand fears
WTI crude oil dips nearly 3% to $69 as Trump’s sweeping tariffs raise global demand concerns
WTI crude oil futures fell sharply Thursday, slipping nearly 3% to trade around $69 per barrel, as investors turned risk-averse following the announcement of sweeping U.S. tariffs. Although energy-related imports were exempt, the scale and intensity of the trade measures—ranging from a 10% baseline tariff to targeted 34% and 20% levies on China and the EU—sparked concerns over the potential impact on global economic activity and, by extension, oil demand.
The sell-off was further exacerbated by a bearish surprise in U.S. crude inventory data. The Energy Information Administration (EIA) reported a 6.2 million-barrel increase in stockpiles last week, defying expectations for a 2-million-barrel draw. The buildup, largely attributed to a surge in Canadian imports, added to growing concerns of a supply overhang. The market response was swift, with WTI retreating from recent highs near $72 reached earlier this week.
USOIL price dynamics (February 2025 - April 2025) Source: TradingView.
Dollar weakness cushions oil losses amid market volatility
Despite the downside pressure, the weakness in the U.S. dollar provided partial relief for oil prices. The dollar index (DXY) slumped to multi-month lows near 102.70 after the tariff announcements raised the probability of a U.S. recession, with traders now betting on resumed interest rate cuts by the Federal Reserve. A softer dollar generally boosts dollar-denominated commodities like oil by making them more affordable for foreign buyers.
Adding to supply-side uncertainties, Russia imposed tighter export restrictions, suspending loadings from key ports. This development offers a potential counterbalance to growing inventory concerns in the U.S., particularly as markets await the upcoming OPEC+ meeting this weekend. According to reports, the coalition may agree to a modest output hike of 135,000 barrels per day for May.
Outlook remains fragile amid policy uncertainty
With crude prices now testing the $69.00 support zone, traders are likely to stay cautious ahead of further economic data, including U.S. ISM Services PMI and jobless claims, as well as any signals from the Federal Reserve. While geopolitical tensions and supply dynamics remain supportive, demand-side risks driven by trade policy and economic slowdowns could cap further upside.
As previously covered, WTI's rally toward $72 faced resistance amid rising geopolitical risks and trade tension. The current rejection reinforces our earlier view that unless demand fundamentals strengthen and inventories tighten, oil’s upside may remain capped.
