Crude oil prices drifted lower on Wednesday as worries about outlook for energy demand resurfaced due to rising tensions between the U.S. and China, and on reports of a likely move by Russia to increase crude output next month.

West Texas Intermediate crude oil futures for July ended down $1.54, or about 4.5%, at $32.81 a barrel.

Brent crude futures shed about 4%, or $1.43, to settle at $34.74 a barrel.

Tensions between the U.S. and China have escalated following China’s move to impose new security laws into Hong Kong that would end country’s autonomy.

With U.S. Secretary of State Mike Pompeo tweeting this morning that he told the Congress that Hong Kong is no longer autonomous from China, it now looks very likely that U.S. may revoke the special treatment meted out to Hong Kong with regard to exemptions from tariff.

Meanwhile, investors were looking ahead to weekly oil data from Energy Information Administration (EIA) and the American Petroleum Institute (API). While API’s report will be out later today, the EIA will release its data Thursday morning.

The reports are delayed by a day this week due to holiday on Monday for Memorial Day.

The material has been provided by InstaForex Company – www.instaforex.com