Rally Over Trump's Tariff Pause Ends As Crude Resumes Downward Plummet

But one lone analytical body insists cheap oil is a demand driver: File Image/Pixabay

A nascent appreciation for U.S. president Donald Trump's tariff strategy that propelled crude prices skyward in the previous session seemed to revert to pessimism and panic on Thursday, with prices resuming their steep downward trajectory.

Helping along the losses was data from the Energy Information Administration showing that U.S. crude stockpiles rose by 2.6 million barrels last week, almost double what analysts had expected.

As of 1730 GMT, West Texas Intermediate fell $2.91, or 4.7 percent, to $59.44 per barrel, while  Brent dropped $2.77, or 4.2 percent, to $62.71 per barrel.

This coincided with the U.S stock market tumbling again by 1500 points on Thursday after rising nearly 3,000 points in the previous session.

Reportedly, worries flourished due to over 70 countries expressing eagerness to negotiate trade with Trump rather than retaliate, which in the previous session was regarded as a positive development.

Jim Burkhard, head of oil market research at S&P Global Commodity Insights, said, "These negotiations with all these different countries — can the U.S negotiate with 70 countries all at once? I don't think the chaos is over."

Also, Washington imposing tariffs to the tune of 125 percent against China in retaliation for that country imposing tariffs against the U.S. caused Ritterbusch and Associates to tell clients on Thursday that this will likely prompt lower U.S. crude imports by Beijing, backing up supply and raising U.S. storage levels.

Reinforcing the gloom was Ole Hansen, head of commodities strategy at Saxo Bank, who remarked, "With a lot of uncertainty still existing, the prospect for a major rebound in crude is not possible at this stage when the market has to deal with the risk of weakening demand and rising production from OPEC."

Hansen was referring to the Organization of the Petroleum Exporting Countries'  recent decision to speed up output hikes starting next month.

A lone voice of cautious optimism was Oilprice.com, which said of the overall crude price rout, "Cheap oil is good news for every consumer country, so chances are demand will strengthen in the coming weeks and months—unless the disastrous economic growth projections that analysts have been in a rush to produce since the beginning of the tariff war materialize."