Singapore: Oil prices dipped on Tuesday, dragged down by concerns that the Sino-US trade dispute will dent economic growth and by signs of rising global supply despite upcoming sanctions against Iran.
Front-month Brent crude oil futures were at $77.15 (Dh283.14) a barrel at 0644 GMT, down 19 cents, or 0.3 per cent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $66.99 a barrel, down 5 cents from their last settlement.
Oil has been caught up in broad financial market slumps this month, with stocks under pressure from the trade war between the world’s two largest economies.
Prices received some support on Tuesday after reports that Trump thinks “a great deal” with China is possible on trade.For now, however, the spat between Washington and Beijing goes on.
Consultancy JBC Energy said the oil price weakness was “probably driven by the wider negative market sentiment amid speculation about additional US tariffs on Chinese imports, should upcoming talks fail to produce the desired results.”
The world’s biggest miner BHP Billiton, which also has oil and gas assets, has trimmed its expectations of global growth for next year and 2020 by about a half to three quarters of a percentage point, Chief Commercial Officer Arnoud Balhuizen said on Tuesday, citing a “lose-lose” result from the US-China trade conflict.
Meanwhile, amid a slowdown in economic growth, high oil prices are hurting consumers and could dent fuel demand, the executive director of the International Energy Agency (IEA) said on Tuesday.
“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries they’re directly related to consumer prices. The second one is global economic growth momentum slowing down,” said IEA chief Fatih Birol.
Oil was also being weighed down by signs of rising supply from top producers, with Saudi Arabia and Russia both indicating they will provide enough oil to meet demand once US sanctions hit Iran from next week.
In a sign that oil supply remains ample despite the looming US sanctions against Iran’s petroleum exports, crude output from the world’s top 3 producers, Russia, the United States and Saudi Arabia, reached 33 million barrels per day (bpd) for the first time in September, Refinitiv Eikon data showed. That’s an increase of 10 million bpd since the start of the decade and means that these three producers alone now meet a third of global crude demand.
Hedge fund managers continued to liquidate former bullish positions in oil last week, with signs of short-selling appearing for the first time in over a year.
Despite that, Hansen said “given the yet unknown impact on Iran’s ability to produce and export [amid sanctions]... we could see some speculative buying emerge ahead of November 4.”
Iran’s seaborne crude exports have fallen from a 2018 peak of just over 2.5 million bpd in May to around 1.5 million bpd in September and October, Eikon data showed.