Oil prices fell about 1.5% on Tuesday as data on anemic manufacturing in Germany and Japan underscored a gloomy outlook for global demand amid renewed concerns about the US-China trade war.
US President Donald Trump sharply criticized what he called China's unfair trade policies in an address at the United Nations General Assembly, helping to stoke fears trade tensions between the two countries would remain elevated, impacting
oil demand, analysts said.
"His statements about China not acting fairly in global trade re-awakened demand growth fears," said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut, adding that Trump's comments fanned market uncertainty over the world's top two economies reaching a trade pact soon. "That helped put some selling pressure in the market."
Brent crude futures fell $1.03 to $63.74 a barrel by 10:44 a.m. CDT. West Texas Intermediate futures were down 85 cents at $57.79 a barrel.
Sluggish manufacturing numbers in leading European economies and Japan also weighed on prices, analysts said.
"We continue to see a constant revision downward for 2019
oil demand," with many forecasters predicting demand to grow around 1 million barrels per day (bpd) or less, said Andy Lipow, president of Lipow Oil Associates in Houston.
"Given continued US production growth and new production in Norway and Brazil, the market feels oversupplied, even though Saudi
oil production has been impacted over the past 10 days," Lipow said. Oil prices have remained at comparatively elevated levels for the year in the wake of the Sept. 14 attack on Saudi Arabia's largest oil-processing facility that halved output in the world's top oil exporter.
Reuters reported on Monday that Saudi Arabia had restored more than 75% of crude output lost after attacks on its
oil installations and would return to full volumes by early next week.
But the Wall Street Journal said repairs at the plants could take months longer than anticipated. State-run
oil company Aramco has stepped up purchases of products such as naphtha, gasoline and diesel from Europe and elsewhere.
Aramco is also buying
oil originating in neighbouring countries to meet its supply obligations to foreign refineries, sources familiar with the matter told Reuters. Its trading arm is arranging for crude from the United Arab Emirates and Kuwait to cover its commitments to certain buyers, the sources said.
European powers - Britain, Germany and France - backed the United States in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security.
At the UN General Assembly, Trump denounced Iran, but said there is a path to peace, which somewhat eased the
oil market's worries about geopolitical risks, analysts said.
"So far, it doesn't look like there will be a military response," said Phil Flynn, an analyst at Price Futures Group in Chicago.
Meanwhile, a preliminary Reuters poll forecast US crude stockpiles were expected to have dropped last week.The poll was conducted ahead of inventory reports from the American Petroleum Institute, an industry group, to be released on Tuesday at 4:30 p.m. and from the US government's Energy Information Administration on Wednesday.