Oil falls on oversupply concerns and renewed US-China trade tensions

Oil prices declined again on Wednesday, extending losses from the previous session, as investors reacted to warnings of a potential global supply glut and renewed US-China trade tensions that could weaken demand.

Brent crude futures slipped 12 cents, or 0.19%, to $62.27 a barrel by 0021 GMT, while US West Texas Intermediate (WTI) crude dropped 10 cents, or 0.17%, to $58.60. Both benchmarks ended Tuesday at their lowest levels in five months.

The International Energy Agency (IEA) said Tuesday that the oil market could face a surplus of up to 4 million barrels per day in 2026, exceeding earlier estimates. The agency cited rising production from OPEC+ members and other producers amid slower demand growth.

Concerns about demand were further pressured by fresh trade frictions between Washington and Beijing. Both countries began imposing new port fees on each other’s ocean carriers, while China also announced sanctions on five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean.

Tensions escalated last week after Beijing expanded export restrictions on rare earths, prompting US President Donald Trump to threaten 100% tariffs on Chinese imports and tighter software export curbs starting November 1.

“Beyond US-China trade relations and the progress of talks, the key for oil prices now is the degree of oversupply, reflected in changes in global inventories,” said Yang An, an analyst at Haitong Futures.

Market participants are also awaiting fresh data on US inventories to gauge domestic demand. A preliminary Reuters poll suggested that crude stockpiles likely rose by around 200,000 barrels in the week ending October 10, while gasoline and distillate inventories fell.

The American Petroleum Institute is scheduled to release its weekly report at 4:30 p.m. EDT (2030 GMT) on Wednesday, followed by official data from the US Energy Information Administration at 10:30 a.m. EDT (1430 GMT) on Thursday.