(MENAFN- Daily Forex) Global crude oil prices have fallen sharply, as fears of a US-China trade war and its possible impact on the global economy, have increased the likelihood of lower energy demand in the near term. Investors are also closely watching a possible shortfall in global supplies of crude oil due to US sanctions on Iran and Venezuela, political tensions in the Middle East and a cut in OPEC-led production. The group is still in constant consultation in order to agree on a continued reduction in production.
In terms of prices, West Texas crude fell to $56.90 a barrel and Brent crude fell to $68.08 a barrel before bouncing around $69.45.
Concerns over trade tensions between the United States and China have mounted after reports that China is considering restricting the export of rare earth elements. Where the United States imports about 80% of its rare earth elements, used in a range of electronic components, from China. In another development, Huawei Technologies Co Ltd filed a motion for summary judgment in the lawsuit against the US government. "The US government has not provided any evidence to prove that Huawei is a security threat," Sung Leopeng, the company's chief legal officer, said in a statement. 'There is no weapon or smoke. The charges are just speculation. Aside from the growing trade disputes between the two largest economies in the world, fears of a rising Italian budget deficit and political chaos in Europe have weakened expectations of demand.
Investors are looking for weekly crude inventories from the US Petroleum Institute (API) and the US Energy Information Administration (EIA). The announcement was delayed by a full day due to Monday's Memorial Day holiday. US inventories are expected to fall this week, but this may not matter to investors much if we do not see some constructive news that trade talks between the two biggest economies are about to resume. The oil market and all risk assets will remain very weak at the moment, and we should not be surprised if we see another 5% fall in oil prices as risk aversion increases.
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