Oil prices slumped during Wednesday’s Asian trading session, even after a positive session on Tuesday that was prompted by supply disruptions in the Midwest United States. Brent crude futures were down 0.63 percent to $69.67 per barrel as of 1:16 p.m. HK/SIN, and U.S. WTI futures were down 1 percent to $58.55 per barrel.
Oil prices are deeply connected to political economic factors as well as to supply levels. OPEC (the Organization of Petroleum Exporting Countries) has long been attempting to bolster prices, implementing a production cut at the start of 2019 which was meant to limit supply and keep prices tight. U.S. President Donald Trump has also instituted sanctions against Iran which have removed the country’s contributions from the market and decreased supply considerably. However, concern about the lingering trade war between the U.S. and China has kept traders worrying that demand will pressure prices downward and that even limited supply will not help to push prices higher.
Last week, crude prices saw their worst weekly performance of 2019. Adding to the pressure on oil prices, Fawad Razaqzada, an analyst at Forex.com, highlighted “falls in emerging market currencies (are) making dollar-priced crude oil dearer to purchase in those nations.” Other analysts credit new production technologies for making it possible to produce more oil, a development which can have both positive and negative impacts on both pricing and the environment.
Still, despite trader concerns about a slowdown in demand, the U.S. Energy Information Administration reported that global demand has not yet declined. In fact, it is likely averaging over 100 million barrels per day this year for the first time, Reuters reported the EIA as announcing.