Oil falls on demand concerns, Hong Kong conflict

Oil prices dropped on Wednesday as investors worried about fuel demand’s slow recovery, while U.S.-China tensions weighed in on the negative market mood.

Brent crude futures lost 0.6%, or 21 cents, at $35.96 per barrel. U.S. West Texas Intermediate crude futures slid 0.9%, or 31 cents, at $34.04 per barrel.

OPEC and its allies including Russia have agreed to cut almost 10 million bpd from production to buoy prices amid the pandemic.

As some states in the U.S. ease lockdowns, an optimistic rise in demand lifted investors’ sentiment. However, economic recovery remains fragile, according to analysts.

Experts predict that the oil market will have recovered by June, but that outlook was too optimistic.

Despite the slow recovery in fuel demand in the United States, crude inventories are still falling.

The market was also affected by comments coming from Larry Kudlow, Trump’s economic adviser, on Beijing’s push for the security law in Hong Kong, calling it “a big mistake”.

China’s national security legislation would weaken Hong Kong’s separate legal status. Beijing is set to approve the law on Thursday.