LONDON (Reuters) – Oil prices fell more than 2% on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted U.S.-China trade dispute that has dragged on the global economy.
FILE PHOTO: Drilling rigs operate at sunset in Midland, Texas, U.S., February 13, 2019. REUTERS/Nick Oxford/File Photo
U.S. crude CLc1 was down $1.80, or 3.27%, at $53.30 a barrel by 1305 GMT and Brent crude LCOc1 was down $1.28 or 2.18% at $57.38.
“The gloomy mood has mainly been down to the U.S.-China stand-off in trade talks as the two countries continue the tit-for-tat measures of implementing import tariffs on each other’s goods,” said Tamas Varga of oil brokerage PVM. “This is the single most important flat price driver of late.”
The United States this week imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list in a trade war that has rumbled on for more than a year.
Though the trade conflict has intensified, U.S. President Donald Trump said the two sides would meet for talks this month.
(Graphic: U.S., Russian, Saudi crude oil production png link: here)
Meanwhile, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the U.S.-China dispute, central bank data showed on Tuesday.
A move on Sunday by Argentina to impose capital controls also cast a spotlight on emerging market risks.
Output from the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran.
Russian oil production C-RU-OUT in August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday.
Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.
“What’s bad for the outlook for global growth is bad for oil at the moment and only big draws in inventories can delay that drift lower,” said Greg McKenna, strategist at McKenna Macro.
Additional reporting by Aaron Sheldrick; Editing by Dale Hudson and David Goodman