Oil prices went down on Tuesday due to weak global data raising concerns about future demand for the commodity despite a positive boost from OPEC’s decision to extend supply cuts until next March.
Brent crude futures (LCoC1) for September delivery were trading down 15 cents, or 0.2%, at $64.91 a barrel by 0311 GMT after dipping to $64.66 earlier. Brent climbed more than $2 a barrel on Monday before paring gains later in the day.
U.S. crude futures for August (CLc1) were down 25 cents, or 0.4%, at $58.84 a barrel, after touching their highest in over five weeks on Monday.
“After 2-1/2 years of production cuts, the effects of rolling over production cuts is losing steam,” said Edward Moya, senior market analyst at OANDA in New York, adding that markets remained nervous about demand.
“The trade war is not likely to get resolved any time soon and while central banks globally are expected to deliver fresh stimulus in the coming months, economic activity is continuing to trend lower.”
While the U.S. and China agreed at a recent Group of 20 leaders summit to restart trade talks, indications that factory activity shrank across much of Europe and Asia in June while growth in manufacturing cooled in the United States weighed on oil prices.
“The weaker PMI prints killed sentiment overnight, and the market started to factor in the realm of the unknown around shale (oil), so (investors) were worried about the fear of oversupply in the face of weaker demand,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
However, the decision to extend production curbs would continue to support oil prices, as OPEC looked to maintain market equilibrium, he said.
The Organization of the Petroleum Exporting Countries (OPEC) agreed on Monday to extend oil supply cuts until March 2020 as the group’s members overcame their differences in order to try to prop up the price of crude.
OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging U.S. output.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts until December 2019 or March 2020.
Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector felt the impact of a contaminated crude crisis that crippled exports.
Meanwhile, U.S. producers hit a monthly record of 12.16 million barrels per day (bpd) in April, data showed, though new U.S. shale oil production is expected to slip this year from last year, according to a survey of major forecasters.