03 Apr 2025

WTI is experiencing significant selling pressure in response to President Trump's announcement of reciprocal tariffs. Additionally, Wednesday's negative EIA report regarding US crude inventories adds to the downward momentum. However, a generally weaker USD provides some support to oil prices, mitigating further declines.

West Texas Intermediate (WTI) crude oil prices continue to decline from the previous day's peak of approximately $72.00, the highest level since February 21, and are facing substantial selling during the Asian trading session on Thursday. Nevertheless, the commodity finds some support around the $69.00 level and is currently trading near $69.65, reflecting a decrease of over 1% for the day.

President Trump's extensive reciprocal tariffs have raised concerns that the escalating trade conflict could negatively impact global economic growth and reduce fuel demand. This situation is compounded by a bearish report from the US Energy Information Administration (EIA) released on Wednesday, which indicated an unexpected increase of 6.2 million barrels in US crude inventories last week, significantly influencing crude oil prices.

Investors appear increasingly convinced that a slowdown in the US economy, driven by tariffs, may compel the Federal Reserve (Fed) to initiate a new cycle of interest rate cuts in the near future. Additionally, this shift towards risk aversion has led to a significant drop in US Treasury bond yields, bringing the US Dollar (USD) closer to a multi-month low reached in March. Consequently, this situation provides some support for commodities priced in USD and helps mitigate losses in Crude Oil prices.

Traders are now anticipating the upcoming US economic reports, which will include the standard Weekly Jobless Claims and the US ISM Services PMI. These figures could impact the dynamics of USD pricing and potentially offer some momentum to oil prices. Nevertheless, the primary focus will remain on trade developments, which are expected to continue significantly influencing the short-term sentiment regarding Crude Oil prices.