Oil traded near the lowest level in a month as concerns that economic turmoil could slow global demand outweighed expectations for a seasonal decline in U.S. crude stockpiles.
Prices in New York were little changed, after front-month futures closed at the lowest level since June 21 on Monday. Escalating trade conflict between the U.S. and China threatens to derail growth across the globe, raising speculation that crude demand could be affected. Meanwhile, America’s oil stockpiles are forecast to have fallen for the second time in three weeks, according to a Bloomberg survey.
Crude has tumbled more than 8 percent this month as the trade spat between the world’s two biggest economies has intensified, with uncertainties impinging on global growth. While the Organization of Petroleum Exporting Countries may boost output by 200,000 barrels a day by the end of 2018, according to a Barclays Plc estimate, investors remain concerned that the war of words between the U.S. and Iran over oil exports and sanctions portends supply risks.
“Prices are a little more bearish, although it is a more modest decline; we don’t see a price collapse and it’s still high $60s,” said David Lennox, a Sydney-based resource analyst at Fat Prophets. “Supply comes and goes, demand comes and goes, but if global growth is looking softer, one would see the impact in due course for oil prices.”
West Texas Intermediate crude for September delivery was at $67.74 a barrel on the New York Mercantile Exchange, down 15 cents, at 7:27 a.m. in London. The contract fell 37 cents to $67.89 on Monday. Total volume traded was about 49 percent below the 100-day average.
Brent for September settlement slid 12 cents to $72.94 a barrel on the London-based ICE Futures Europe exchange. Prices on Monday fell 1 cent to $73.06. The global benchmark crude traded at a $5.23 premium to WTI.
Futures for September delivery rose 0.9 percent to 494.9 yuan a barrel on the Shanghai International Energy Exchange, after falling 0.6 percent on Monday.
As U.S. President Donald Trump prepares to slap $500 billion tariffs on Chinese goods, finance ministers and central bankers from the Group of 20 nations warned risks including rising financial vulnerability and structurally weak growth.
The simmering tension between the U.S. and China, the world’s biggest oil buyer, threatens to strain growth at Asia’s largest economy, which grew 6.7 percent in the second quarter — the slowest expansion since 2016.
In the the U.S., nationwide crude stockpiles were expected to have dropped by 3.1 million barrels last week, while inventories in the storage hub at Cushing, Oklahoma, may have also declined by 900,000 barrels, according to a Bloomberg survey before Energy Information Administration data on Wednesday.
“We are in the midst of dry season, so if we were to see a decline, it would be now,” said Lennox, referring to the expected drop in stockpiles. American crude inventories have dropped from this year’s peak in mid-May with the start of the summer driving period when demand typically peaks.
Russia’s Energy Minister Alexander Novak and his Iranian counterpart Bijan Zanganeh discussed OPEC and upstream cooperation in the Persian Gulf nation, according to a statement. Waha oil production in Libya rose to 130,000 barrels a day from 100,000 barrels a day last week as loading resumed at Es Sider port, according to people familiar with the matter.