Yesterday, Brent crude oil futures fell $1.74, a decrease of 2.45%, the lowest since December 2021. US crude oil futures fell $1.95, a decrease of 2.86%, reaching the lowest level since May 2023.

During the trading session, Brent crude oil briefly hit $68.33, while US crude oil fell to $65.22. Later, due to the White House's announcement to postpone some car tariffs, oil prices slightly rebounded.

The inventory of crude oil in the United States has increased significantly

According to data from the US Energy Information Administration (EIA), as of the week ending February 28th, US crude oil inventories increased by 3.6 million barrels, bringing the total to 433.8 million barrels, far exceeding market expectations of 341000 barrels. Despite a decrease in gasoline and distillate inventories, the increase in product exports due to refinery spring maintenance has not offset market concerns about oversupply.

After the data was released, Brent crude oil fell by more than $2 at one point.

The unexpected surge in inventory indicates that market demand may be lower than expected, further exacerbating concerns about oversupply in the crude oil market.

OPEC+decides to increase production from April onwards

The Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) announced on Monday that they will increase oil supply for the first time since 2022 and plan to gradually expand production starting from April. This decision eased the tight supply situation in the market, but also put pressure on oil prices.

Analysts pointed out that although OPEC+has been limiting production to support prices in the past, the uncertainty of the outlook for crude oil demand in recent times has led the organization to decide to adjust its strategy. Some market participants are concerned that a slowdown in global economic growth may affect crude oil demand, exacerbating the imbalance between supply and demand in the market due to increased supply.

US trade policy affects market sentiment

US President Trump announced tariffs on imported goods from Canada and Mexico, including some energy products, sparking market concerns about global trade. However, the White House later announced that it would postpone imposing tariffs on some North American produced cars for one month after talking to major automakers.

Market sources also revealed that the United States may lift the 10% tariff imposed on Canadian crude oil and gasoline imports that comply with the rules of origin of the USMCA.

Market participants believe that the uncertainty of tariff policies may have a negative impact on global economic growth, thereby weakening energy demand. Panmure Liberum analyst Ashley Kelley said, "The US tariffs on major Asian countries, Canada, and Mexico quickly provoked retaliation, exacerbating market concerns about the global economic slowdown and its impact on energy demand

From a technical perspective, US crude oil has already fallen below important support levels, and the moving average has turned downwards. The short-term structure is bearish, and the overall downward trend is maintained. The possibility of further downward acceleration cannot be ruled out

Edit viewpoint

The recent continuous decline in oil prices is mainly affected by the dual effects of supply growth and weak demand. The significant increase in US crude oil inventories exceeded market expectations, indicating a slower than expected demand recovery, while OPEC+'s decision to increase production further strengthened supply pressure.

In addition, changes in US trade policies may affect global economic growth and indirectly impact demand in the energy market.

In the short term, oil prices may still face some pressure, and the focus of market attention will be on OPEC+'s future production adjustment strategy, US economic data, and further developments in the global trade situation.

If the US economic growth slows down and trade frictions escalate, energy demand may be further suppressed, and oil prices may continue to decline.