NEW YORK - Oil prices fell more than 1% on Monday as U.S.-China trade tensions continued to threaten demand for crude and as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal.
Brent crude futures fell $1, or 1.6%, to settle at $62.29 a barrel. U.S. West Texas Intermediate (WTI) crude lost 73 cents, or 1.4%, to end at $53.26 a barrel.
U.S. President Donald Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he does not reach a trade deal with China’s president at a Group of 20 summit later this month.
China’s foreign ministry said that China is open for more trade talks with Washington but has nothing to announce about a possible meeting.
China’s crude oil imports slipped to around 40.23 million tonnes in May, from an all-time high of 43.73 million tonnes in April, customs data showed, due to a drop in Iranian imports caused by U.S. sanctions and refinery maintenance.
“As U.S.-China tariff concerns heighten, we see more downward adjustments to world oil demand both across this year and next in providing a limiter on occasional price advances,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
Barclays bank, in a note, said its economists had revised down their GDP growth outlook for the United States, China, India and Brazil - countries that account for more than three-quarters of their oil demand growth assumptions for this year.
“The revisions imply a 300,000 barrel per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year,” the British bank said.
On the supply side, Saudi Energy Minister Khalid al-Falih said Russia was the only oil exporter still undecided on the need to extend the output deal agreed by top producers.
The Organization of the Petroleum Exporting Countries and some non-members, including Russia, have withheld supplies since the start of the year to prop up prices. The deal is due to expire this month.
Yet, Russian energy minister Alexander Novak said there is a still a risk that oil producers pump out too much crude and prices fall sharply. Novak said he could not rule out a drop in oil prices to $30 per barrel if the global deal was not extended.
Many oil exporting countries have confirmed they are prepared to hold a policy meeting with OPEC in Vienna over July 2-4, instead of the scheduled date later this month, Novak said.
In the United States, crude production has surged, rising to a weekly record at 12.4 million barrels per day, while crude stockpiles have climbed close to two-year highs, according to the Energy Information Administration’s data last week.
“The market has seen pressure over the last couple of weeks due to the significant rise in crude and product inventories here in the U.S. that has pressured prices as the market now awaits the outcome of the upcoming OPEC and non-OPEC producers’ meeting,” said Andrew Lipow of Lipow Oil Associates in Houston.