Crude oil remains a highly volatile trading instrument. Just after a recent stabilization on the news that Saudi Arabia is exploring new options to reduce supply and boost prices, now oil has turned to the downside again. The main reason for the drop in price is the ongoing trade conflict between the United States and China.
The trade war is negatively affecting the entirety of the financial markets. It is causing a slowdown in trade, which is then reflected in industrial activity. With lower industrial output, factories need less fuel, which then means the oil market has more supply than demand, causing prices to fall.
Last week’s fundamental reports and growth forecasts from the leading economies in the world caused investors to be pessimistic about oil demand. In addition, China and the United States seem to be farther from reaching a trade agreement than ever, after Trump recently sabotaged the trade negotiations with surprising new tariffs. Right now many fear that the global economy is at its worst since the 2008 crisis.
Brent crude oil fell to $58.40, while the WTI brand reached $54.33.
