NEW YORK: Oil prices fell on Tuesday, with US crude futures down 3pc after manufacturing data raised concerns about a weakening global economy, while the US-China trade dispute continued to drag on investor sentiment.
US West Texas Intermediate (WTI) crude futures fell $1.68, or 3.1pc, to $53.42 a barrel by 12:45 p.m. EDT (1645 GMT). The session low was $52.84 a barrel, the lowest since Aug. 9.
Brent crude futures lost 92 cents, or 1.6pc, to $57.74 a barrel. It sank as low as $57.23 a barrel, also the weakest since Aug. 9.
Prices extended losses following data that showed US manufacturing activity in August contracted for the first time in three years, with new orders and hiring declining as trade tensions weighed on business confidence.
The US numbers came after separate data showing euro zone manufacturing activity contracted for a seventh month in August as a continued decline in demand sapped optimism.
“That deterioration is continuing to undermine the demand growth outlook for oil,” said John Kilduff, a partner at Again Capital in New York.
Elsewhere, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the US-China dispute, central bank data showed.
Oil prices have fallen around 20pc since a 2019 peak reached in April, hit by concerns the trade war would dent oil demand.
US President Donald Trump said on Tuesday that trade talks between the United States and China were going well, though he warned that he would be “tougher” in negotiations if discussions drag on until his second term. Trump said the two sides would meet for talks this month.
Chinese Vice Premier Liu He said China firmly opposes a trade war, the state news agency Xinhua reported.
Washington began imposing 15pc tariffs on an array of Chinese imports on Sunday, while China began placing new duties on US crude oil.
The US-China trade dispute “is the single most important flat price driver of late,” said Tamas Varga of oil brokerage PVM.
On the supply side, Venezuela’s oil exports fell in August to their lowest level in 2019, internal reports and Refinitiv Eikon data showed, following tougher US sanctions.
Data due this week on US inventory levels will be delayed by a day to Wednesday and Thursday because of the US Labor Day holiday on Monday.
Oil prices are likely to remain range-bound for the “foreseeable future” and there will be little spending growth in North American oil and gas fields in the near to medium term, Lorenzo Simonelli, chief executive of General Electric Co’s Baker Hughes said on Tuesday.