Oil extends losing streak for third straight day on Trump tariffs, OPEC+ hike: Brent at six-month low, WTI drops 4%

Global crude oil prices extended their losing streak for the third straight day on Wednesday, March 5, after US crude oil stocks posted a larger build. Investors worried about the Organisation of Petroleum Exporting Countries and its allies (OPEC+) to proceed with output hikes in April and US President Donald Trump's tariffs on Canada, China and Mexico, which triggered trade fears.

Brent futures fell $2.19, or 3.1 per cent, to $68.85 a barrel. The US West Texas Intermediate (WTI) crude declined $2.55, or 3.7 per cent, to $65.71 a barrel. The Brent crude benchmark sits at a six-month low below the $70 per barrel-mark. On Tuesday, both benchmarks settled near multi-month lows after investors braced for tariffs and counter-tariffs to slow economic growth and reduce fuel demand.

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Oil Prices Today: What's weighing on the commodity?

-US crude stocks rose more than expected, while gasoline and distillate inventories dropped. The Energy Information Administration (EIA) said crude inventories rose by 3.6 million barrels to 433.8 million in the week, exceeding analysts' expectations. Brent crude futures fell more than $2 a barrel after the data.

-Analysts say the US tariffs on China, Canada, and Mexico, which sparked swift reprisals from each nation, have increased concerns over a slowdown in economic growth and the consequent impact on global energy demand.

Also Read: Brent crude outlook bearish on oversupply, grim oil demand; 2025 average pegged at $74 after hitting $80 in 2024

-Canada and China retaliated immediately to Trump's tariffs on Tuesday, and Mexican President Claudia Sheinbaum said the country would respond. OPEC+ decided on Monday to increase output for the first time since 2022, pressuring crude prices.

-The OPEC+ cartel will increase its production by 138,000 barrels per day starting in April, the first step in a planned monthly increase to unwind its nearly six million barrels per day of cuts, equal to six per cent of the global demand. Analysts at Morgan Stanley Research said it was possible OPEC+ would deliver only a few monthly increases rather than fully unwind the cuts.

-The Trump administration also announced on Tuesday that it was ending a licence the US government granted to US oil producer Chevron in 2022 to operate in Venezuela and export its oil. According to ING commodities strategists, the decision risks 200,000 barrels per day of supply.

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Where are oil prices headed?

According to Kaynat Chainwala, AVP-Commodity Research, Kotak Securities, WTI crude oil fell to $66.80 per barrel, the lowest level since mid-November, as demand concerns, fueled by trade wars and OPEC+ plans to unwind production cuts in April, intensified bearish sentiment. 

"We expect crude oil prices to remain volatile. Crude oil has support at $67.00-66.40 and resistance at $68.25-69.00. In INR, oil has support at ₹5,910-5,860 while resistance is ₹6,050-6,120," said Rahul Kalantri, VP of Commodities, Mehta Equities Ltd.

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