Oil prices tumble amid concerns over weakening demand

Oil prices tumble amid concerns over weakening demand

Oil prices tumble amid concerns over weakening demand

Earlier on Tuesday, oil prices were essentially flat as weak US economic figures and concern over the trade war, coupled with estimates for yet another record in America's shale production, were offsetting fears of an oil supply disruption due to increased tension in the Middle East.

US business sentiment has sagged as tensions over trade have escalated between China and the United States and on signs of softness in the labour market.

U.S. West Texas Intermediate crude futures rose $1.97, or 3.8%, to settle at $53.90 a barrel.

Oil prices rose about $2 a barrel on Tuesday after U.S. President Donald Trump said he would hold an extensive meeting with Chinese President Xi Jinping at the G20 summit later this month.

Oil prices steadied on Tuesday, caught between rising tensions in the Middle East and signs that economic growth is being hit by trade tensions between the United States and China.

High U.S. crude stockpiles, partly due to growing domestic production, has also weighed on the market. -China trade war and disappointing economic data.

China, which previously declined to say whether the two leaders would meet, confirmed the get-together.

But tensions in the Middle East are likely to keep prices supported, analysts said.

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Tensions in the Middle East after last week's tanker attacks, with the US planning to send more troops to the Middle East, also lent support.

Though danger of an immediate confrontation over last week's tanker attacks - which the USA blamed on Iran but Tehran denied - appeared to recede, tensions over the strategic route remain high.

Bank of America Merrill Lynch lowered its Brent price forecast to $63 per barrel from $68 a barrel for the second half of 2019 on faltering demand.

Saudi Arabian Energy Minister Khalid al-Falih said on Monday that countries need to cooperate on keeping shipping lanes open for oil and other energy supplies to ensure stable supplies.

Market participants are also awaiting a decision by the Organization of the Petroleum Exporting Countries and other major oil producers including Russian Federation on whether to extend a production cut pact that expires this month.

OPEC and non-OPEC states are discussing holding meetings on July 10-12 in Vienna, a date range proposed by Iran, OPEC sources said on Tuesday. "The group agreed to cut output by 1.2 million barrels per day from January 1".

In the US, oil output from seven major shale formations is expected to rise by about 70,000 barrels per day in July to a record 8.52 million barrels per day, the US Energy Information Administration said.

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