Oil Prices Fall As Trade Tensions And IEA Outlook Pressure Global Demand

Energy and equity markets are pulling back to start Tuesday’s trading session, primarily driven by a resurgence of US-China trade tensions which has heightened fears about global economic demand. China’s action to sanction US subsidiaries of a South Korean shipbuilder marks a clear escalation of the dispute, weighing on market sentiment.

WTI futures are trading down nearly 2% to five-month lows, hovering around $58 per barrel, with the Brent following close behind. This movement follows a strong rally yesterday (Monday) on initial hopes that trade tensions might ease. Refined product futures are also trading lower with RBOB and HO exchanging hands 2 and 5 cents per gallon below yesterday’s settlement, respectively.

Aside from the seemingly ever-present tension between the world’s two largest economies, this month’s report from the IEA is also being blamed for this morning’s bearish pressure. The International Energy Agencywarned that the global oil market is facing alarger surplus than previously anticipated, with inventories poised to rise as large crude shipments reach their destinations. The Agency bumped its oil-supply growth forecast significantly to 3 million barrels per day for 2025 (up from 2.7mm) and 2.4 million barrels per day for 2026 (up from 2.1mm) due to ample production from the Western hemisphere and the return of OPEC+ production.

New Jersey has declared a state of emergency as the nor’easter, which has spent the last few days creeping up the East Coast, closes in on the tri-state area. As of now, infrastructure disruptions caused by the storm seem limited to washed-out roads and air travel delays.

Tropical Storm Lorenzo formed over the Atlantic yesterday, but it expected to stay out to sea without threatening landfall for its duration.