Oil Slumps Amid Economic Woes as US Confidence Plummets
West Texas Intermediate (WTI) crude plummeted 2.6% to below $69 a barrel, marking its lowest price of the year. This decline mirrors the broader equity markets' slump as US consumer confidence dropped significantly, exceeding analysts' expectations.
The combination of President Trump's tariffs and moves to detach economic ties with China has exacerbated concerns about energy demand in the world's largest oil consumer. Domestically, trade turmoil has pushed up Americans' inflation expectations amid a slowing labor market.
"Crude markets face bearish pressure due to a string of disappointing economic data," said Frank Monkam of Buffalo Bayou Commodities. "This downturn bodes poorly for crude demand."
WTI has broken below the $5 range it occupied for most of February. The initial spike to over $80 earlier this year has faded due to weak Chinese demand, potential market oversupply, and growth concerns from tariffs.
Recently, the US imposed sanctions on actors linked to Iranian crude shipments. However, markets have reacted mildly, anticipating that trade will adapt through increased ship-to-ship transfers or disabling geo-location signals.
"Sanctions won't be bullish unless we see naval forces blockading tankers, which would be an unprecedented escalation," said Joe DeLaura, ex-trader and energy strategist at Rabobank.