Oil futures prices slipped Tuesday, unable to extend the late-Monday gain that followed word of extended OPEC production cuts, with investors unable to shake demand worries tied to a vulnerable global economy and trade.
Analysts said the largely as-expected production extension packed few surprises and so may not fully offset the clouds forming on the demand side.
“Oil traders will now turn their attention to the economic data, as the weakening global activity and waning demand could again weigh on the sentiment,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note.
In early trading, August West Texas Intermediate crude CLQ19, -1.20% slipped 12 cents, or 0.2%, at $58.98 a barrel on the New York Mercantile Exchange. Trade has been choppy and narrowly confined since front-month contract prices posted a gain of 9.3% in June, according to Dow Jones Market Data.
International benchmark September Brent BRNU19, -0.81% was at $64.84, down 28 cents, or 0.4%, on ICE Futures Europe. Prices on a front-month contract basis were up 3.2% for June.
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Futures prices had settled higher Monday, then held onto most of those gains in electronic trading after Venezuela’s oil minister Manuel Fernandez said the Organization of the Petroleum Exporting Countries will extend its production-cut agreement by nine months through March 2020. The cartel also fully supports a charter to formalize its alliance with non-OPEC producers.
Saudi Energy Minister Khalid al-Falih, meanwhile, said OPEC and its allies “enthusiastically came together” to support a charter to formalize their alliance. The announcements were made following a nearly five-hour delay to the group’s scheduled press conference. OPEC will hold an official meeting with non-OPEC producers on Tuesday.
As for demand, the U.S. and China agreed at the G-20 leaders summit over the weekend to restart trade talks, which initially soothed concerns that a trade war may lower energy consumption. But President Trump raised fresh fears of a bumpy road ahead on trade when he said any deal with China would need to be “somewhat tilted” in favor of Washington.
Trade negotiations play out against a backdrop of recent data exposing vulnerabilities in the global expansion. Factory activity slowed across much of Europe, Asia and the U.S. in June.
August natural gas US:NGN19 rose 3 cents, or 1.1%, to $2.291 per million British thermal units. August gasoline US:RBN19 fell 1 cent, or 0.4%, to $1.9236 a gallon. August heating oil US:HON19 fell less than a cent, or 0.5%, to $1.944 a gallon.
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