Oil prices are being pressured by ongoing worries about demand as the US-China trade war.
Tokyo: Oil fell on Tuesday amid worries over the outlook for demand after the latest signs that international trade disputes have been dragging on the global economy, although the potential for conflicts in the Middle East offered support to prices.
Brent crude futures were down 21 cents, or 0.3 per cent, at USD 63.90 a barrel by 0343 GMT. They fell 12 cents on Monday.
US West Texas Intermediate crude futures were down 25 cents, or 0.4 per cent, at USD 57.41 a barrel. They rose 15 cents in the previous session.
Oil prices are being pressured by ongoing worries about demand as the US-China trade war, heading into its second year, dampens prospects for global economic growth, which strongly impacts oil demand growth. The countries are the world’s two largest oil consumers.
Japan’s core machinery orders fell by the most in eight months, data showed on Monday, in a sign the global trade tensions are taking a toll on corporate investment.
Japanese government figures on Tuesday also showed that real wages in the country fell for a fifth straight month. The country is the fourth-largest crude user in the world.
“The weaker global economic outlook is keeping oil prices under downward pressure, but tensions in the Middle East are enhancing awareness to possible supply risk and should keep a floor under oil in the medium term,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
Iran on Monday threatened to restart deactivated centrifuges and step up its enrichment of uranium to 20 per cent in a move that further threatens the 2015 nuclear agreement that Washington abandoned last year.
Washington has imposed sanctions that eliminate benefits Iran was meant to receive in return for agreeing to curbs on its nuclear program under the 2015 deal with world powers.
The confrontation has brought the United States and Iran close to conflict. Last month, US President Donald Trump called off air strikes at the last minute in retaliation for Iran shooting down a U.S. drone over the Gulf, which followed attacks on two oil product tankers in the nearby Gulf of Oman by unidentified assailants. Meanwhile, Goldman Sachs said growth in U.S. shale production was likely to outpace that of global demand at least through 2020, limiting gains in oil prices despite output curbs led by the Organization of the Petroleum Exporting Countries.
Industry and government data for release later on Tuesday and on Wednesday is expected to show that US crude stockpiles fell for a fourth consecutive week, dropping 3.6 million barrels, according to a preliminary Reuters poll.