Oil prices slipped on Monday as signs of an economic slowdown amid international trade disputes began to outweigh supply fears stoked by attacks on oil tankers in the Gulf of Oman last week.
Brent futures fell 42 cents, or 0.7%, to $61.59 a barrel, having gained 1.1% on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 52 cents, or 1%, at $51.99, having firmed by 0.4% in the previous session.
“China’s industrial output growth (is) falling to the lowest level in 17 years amid trade tensions with the U.S. Today, oil markets will have to digest more demand concerns as India implemented retaliatory tariffs on a number of U.S. goods yesterday,” consultancy JBC Energy said in a note.
Also sapping prices was the dim outlook for oil demand growth in 2019 projected by the International Energy Agency (IEA) on Friday, citing worsening prospects for global trade.
Market expectations of a price rise had been shrinking consistently in the period leading up to the attacks.
“Seven consecutive weeks of selling has now reduced the combined long in Brent and WTI crude oil by 41% to 421,000 lots, a near-four-month low,” said Saxo Bank commodity strategist Ole Hansen
“This is before the tanker attacks in the Gulf of Oman briefly boosted prices before being capped again by demand fears and another counter-seasonal rise in US crude oil stocks.”
Though danger of an immediate confrontation over last week’s tanker attacks – which the United States blamed on Iran but Tehran denied – appeared to recede, tensions over the strategic route remain high. A fifth of the world’s oil passes through the Strait of Hormuz.
U.S. Secretary of State Mike Pompeo on Sunday said that Washington does not want to go to war with Iran but will take every action necessary, including diplomacy, to guarantee safe navigation in the Middle East.
Prices received no boost from comments by Saudi energy minister Khalid al-Falih on Monday reiterating that OPEC was moving was towards a consensus on extending a production cut agreement in a meeting he predicted would convene in the first week of July.
The Organization of the Petroleum Exporting Countries plus Russia and other producers, have a deal to cut output by 1.2 million bpd from Jan. 1.
The pact ends this month and the group meets in the coming weeks to decide its next move.