Oil slipped on concern that an escalating trade dispute between the U.S. and China will dampen global growth at a time when American crude inventories are growing.
Futures slid 0.5 percent to trade below $67 a barrel in New York, after a decline of 0.8 percent on Monday. The U.S. is said to prepare another round of tariffs on all remaining Chinese imports if talks between the presidents of the two countries fail to ease trade friction. Meanwhile, American crude stockpiles are forecast to have risen for a sixth straight week.
Crude has retreated almost 9 percent this month, the worst monthly decline since July 2016. While ongoing trade tensions between the world’s two largest economies stoke concerns over global energy demand, traders continue to watch how much Iranian supply will be taken out of the market when U.S. sanctions hit early next month.
“Investors have become wary of the global economic outlook,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “Saudi Arabia has pledged to raise output, and together with rising U.S. stocks, it has eased supply concerns in the market.”
West Texas Intermediate for December delivery fell 37 cents to $66.67 on the New York Mercantile Exchange at 10:01 a.m. in London. The contract dropped 55 cents to $67.04 on Monday. Total volume traded was 16 percent below the 100-day average.
Brent for December settlement, which expires Wednesday, traded at $76.85 a barrel on the London-based ICE Futures Europe exchange, down 49 cents. The contract lost 0.4 percent to $77.34 on Monday. The global benchmark crude traded at a $10.21 premium to WTI.
In case a planned meeting between presidents Donald Trump and Xi Jinping yields no progress on the sidelines of a Group of 20 summit in Buenos Aires next month, U.S. officials are preparing a new list which would apply to the Chinese products that aren’t already covered by previous rounds of tariffs.
In America, crude inventories are forecast to have risen by 3.11 million barrels last week, according to a Bloomberg survey before the U.S. Energy Information Administration releases data Wednesday. That would be a sixth consecutive week of gains, the longest streak of increases since March 2017.
Other oil-market news: North American oil and gas producers are delivering the wrong type of growth, at least where investors are concerned: too much production, not enough cash. BP Plc reported a surge in profits that smashed estimates. IEA Executive Director Fatih Birol says oil demand is “still strong” Compared to historical averages.