SINGAPORE (Reuters) – Oil prices slipped on Tuesday as worries that a weakening global economy would dent demand for the commodity outweighed OPEC’s decision to extend supply cuts until next March.
FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer
Brent crude futures LCoc1 for September delivery had dropped 33 cents, or 0.5%, to $64.73 a barrel by 0034 GMT. They climbed more than $2 a barrel on Monday before paring gains later in the day.
U.S. crude futures for August CLc1 had fallen 48 cents, or 0.8%, to $58.61 a barrel, after touching their highest in over five weeks on Monday.
“After 2-1/2 years of production cuts, the effects of rolling over production cuts is losing steam,” said Edward Moya, senior market analyst at OANDA in New York, adding that markets remained nervous on how demand will pan out over the next few months.
“The trade war is not likely to get resolved any time soon and while central banks globally are expected to deliver fresh stimulus in the coming months, economic activity is continuing to trend lower.”
The U.S.-China trade conflict has pressured global markets, stoking worries about demand for commodities such as crude oil.
The Organization of the Petroleum Exporting Countries (OPEC) agreed on Monday to extend oil supply cuts until March 2020 as the group’s members overcame their differences in order to try to prop up the price of crude.
OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging U.S. output.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts of 1.2 million barrels per day, or 1.2% of world demand, until December 2019 or March 2020.
Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector still felt the impact of a contaminated crude crisis that crippled exports.
Oil prices have also come under renewed pressure in recent months from rising U.S. supplies.
U.S. producers hit a monthly record of 12.16 million barrels per day (bpd) in April, the latest available data showed, though new U.S. shale oil production is expected to slip this year from last year, according to a survey of major forecasters.
Reporting by Jessica Jaganathan; Editing by Joseph Radford