Oil prices fell further on Wednesday, extending recent heavy losses as deepening U.S.-China trade tensions weighed on the outlook for the global economy and energy demand.
Brent crude futures LCOc1 were down 70 cents, or 1.2 per cent at 58.26 dollars a barrel by 1205 GMT, setting a fresh seven-month low. Prices have lost more than 20 per cent since hitting their 2019 peak in April.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 38 cents, or 0.7 per cent, at 53.25 dollars.
Brent has plunged more than 10 per cent over the past week after U.S. President Donald Trump said he would slap a
10 per cent tariff on a further 300 billion dollars in Chinese imports from Sept. 1, sending global equity markets into a tailspin.
“The market continues to grow more uncertain about the demand outlook, given the deterioration of trade talks between China and the U.S.,” ING analysts said in a note.
The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of 2020.
Trump on Tuesday dismissed fears that the trade row with China could be drawn out further. His comments failed to prevent shares in Asia from falling for an eighth straight session on Wednesday.
“We believe that the oil market is now in a phase of exaggeration. Demand is not sufficiently weak to justify the current price performance.
“Assuming there is no recession, oil demand should continue to see robust growth,” Commerzbank said in a note.
Tensions in the Middle East remain high after Iran seized a number of tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil shipments.
Saudi Energy Minister Khalid al-Falih and U.S. Energy Secretary Rick Perry on Tuesday expressed mutual concern over threats targeting freedom of maritime traffic in the Gulf.
“There are concerns that an event could occur at any moment, the risk might be shifting to the upside in the near term for oil contracts,” said Michael McCarthy, chief market strategist at CMC Markets.