Oil prices dropped Today (Tuesday) on demand concerns following the latest signs the U.S.-China trade war is dragging on the global economy.
Oil prices are being pressured by ongoing worries about demand as the U.S.-China trade war, heading into its second year, dampens prospects for global economic growth, which strongly impacts oil demand growth. The countries are the world’s two largest oil consumers.
Brent crude futures were down 14 cents, or 0.2%, at $63.97 a barrel by 0524 GMT. They fell 12 cents on Monday.
U.S. West Texas Intermediate crude futures were down 20 cents, or 0.4%, at $57.46 a barrel. They rose 15 cents in the previous session.
Japan’s core machinery orders fell by the most in eight months, data showed on Monday, in a sign the global trade tensions are taking a toll on corporate investment.
Japanese government figures on Tuesday also showed that real wages in the country fell for a fifth straight month. The country is the world’s fourth-largest user of crude.
“The weaker global economic outlook is keeping oil prices under downward pressure, but tensions in the Middle East are enhancing awareness to possible supply risk and should keep a floor under oil in the medium term,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
Hedge funds sold more Brent futures and options last week as concerns about the global economy trumped the decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to extend output cuts.
Industry and government data for release later on Tuesday and on Wednesday is expected to show that U.S. crude stockpiles fell for a fourth consecutive week, dropping 3.6 million barrels, according to a preliminary Reuters poll.