Oil prices fall partly due to rising Opec and Russian oil output

Tokyo/London — Oil prices fell 1% on Tuesday, weighed down by the protracted US-China trade dispute that has dragged on the global economy as well as rising Opec and Russian oil output.

US crude was down 65 US cents, or 1.19%, at $54.45 a barrel by 8.57am GMT, while Brent was down 47c at $58.19 a barrel.

This week, the US imposed 15% tariffs on a variety of Chinese goods and China began to impose new duties on a $75bn target list, deepening the trade war that has rumbled on for more than a year.

US President Donald Trump said both sides would still meet for talks later in September.

South Korea’s economy turned out to have expanded less than estimated during the second quarter as exports were revised down in the face of the prolonged US-China trade 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.

“Oil will struggle to make substantial headway topside this week with no progress on trade talks or meetings even, soft data from Asia and a possible cracking of Opec’s resolve to control production,” said Jeffrey Halley, senior market analyst at Oanda.

Output from the oil cartel rose in August for the first month in 2019 as higher supply from Iraq and Nigeria outweighed restraint by top producer Saudi Arabia and losses caused by US sanctions on Iran.

Russian oil production in August rose to 11.294-million barrels per day (bpd), topping the rate Moscow has pledged to cap output at under a pact with other producers and hitting its highest since March, data showed on Monday.

Data due this week on US inventory levels will be delayed by a day to Wednesday and Thursday due to the US public 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,” McKenna Macro strategist Greg McKenna said.

Reuters