Oil falls on poor global growth due to US-China trade war
Losses have, however, been limited by tensions in the Middle East as Opec+ mulls whether to extend its supply cuts
London — Oil prices fell for a second day on Tuesday on signs that global economic growth is being hit by the US-China trade war, though losses were capped by Middle East tensions after last week’s tanker attacks.
Brent crude futures were trading 42c down at $60.52 a barrel by 9.32am GMT. US West Texas Intermediate (WTI) crude futures lost 26c to $51.67.
The New York Federal Reserve said on Monday that its gauge of business growth in New York state posted a record fall this month to its weakest level in more than two-and-a-half years, suggesting an abrupt contraction in regional activity.
US business sentiment has sagged as trade tensions have escalated between China and the US and on signs of softness in the labour market.
Oil prices have fallen by about 20% from April’s 2019 highs, partly because of concerns over the US-China trade war and disappointing economic data.
US President Donald Trump and China’s President Xi Jinping could meet at the G20 summit in Japan this month. Trump has said he would meet Xi at the event, though China has not confirmed the meeting.
Putting further pressure on oil, the US energy department said on Monday that shale oil output is expected to reach a record high in July.
Fears of a confrontation between Iran and the US have mounted since last Thursday’s oil tanker attacks, which Washington has blamed on Tehran. Iran has denied involvement.
“Oil prices appear unperturbed by the further escalation of the Iran crisis,” said Commerzbank’s Carsten Fritsch.
Iran said on Monday it would breach internationally agreed curbs on its stock of low-enriched uranium within 10 days, adding that European nations still have time to save a landmark nuclear deal.
Acting US defense secretary Patrick Shanahan announced the deployment of about 1,000 more troops to the Middle East on Monday, for what he said were defensive purposes, citing concerns about a threat from Iran.
Saudi Arabian energy minister Khalid al-Falih on Monday said that countries need to co-operate on keeping shipping lanes open for oil and other energy supplies to ensure stable supplies.
He also said that Saudi exports and production are expected to remain at “about the same level” as the past few months.
Market participants are also awaiting a meeting between oil cartel Opec and other producers including Russia, a group known as Opec+, to decide whether to extend a production cut agreement that ends this month.