Oil Reflects Its Upward Trajectory Amid Rising Trade Concerns

SadaNews - Oil prices fell as U.S. President Donald Trump's attempts to annex Greenland raised concerns across broader markets, at a time when traders are awaiting new indicators from the International Energy Agency regarding the massive surplus in supply.

Brent crude for March delivery fell by 1% to $64.25 per barrel at 1:54 PM Singapore time, while West Texas Intermediate (WTI) for March delivery declined by 0.9% to $59.84 per barrel.

U.S. efforts to exert control over the Arctic region have raised doubts about the U.S.-European Union alliance, weakening the appetite for riskier assets, including stocks as well as commodities like oil. Volatility in crude prices remains high.

Surplus Concerns Weigh on Prices

Oil remains under pressure from expectations that supply will exceed demand this year, with the International Energy Agency set to release its monthly report later on Wednesday, which is expected to show a significant surplus in the market.

Venezuelan exports have also been a focus, as traders monitor potential destinations for oil that was previously mostly shipped to China, following U.S. intervention earlier this month.

U.S. Seizes Seventh Oil Tanker Near Venezuela

The Executive Director of the International Energy Agency, Fatih Birol, said during a panel discussion at the World Economic Forum in Davos, Switzerland, on Tuesday: "For at least the next three to four years, we may see downward pressure on oil and gas prices due to the huge quantities of supplies coming from the U.S. and some other countries."

Awaiting Trump's Speech in Davos

President Trump is scheduled to give a speech at the Davos Forum later on Wednesday. Ahead of these remarks, the U.S. administration pledged to impose a 10% tariff on eight European nations amid a dispute over Greenland, raising the specter of renewed trade friction that could harm growth and pressure energy demand.

However, there remain pockets of tightness, as the spot price differentials for crude, currently represented by the gap between the March and April contracts, maintain a backwardation pattern, which is a positive signal.

Production stoppages in a major field in Kazakhstan, along with loading restrictions at the Caspian Pipeline Consortium facility in the Black Sea, are also contributing to the underlying strength of the market.