Oil prices stabilized on Tuesday as worries over supply disruptions balanced signs of increasing production and potential damage to global growth from the U.S.-China trade dispute.
Benchmark Brent crude oil was up 15 cents at $71.99 a barrel by 0920 GMT after earlier falling to $71.35, its lowest since April 17. The contract fell 4.6 percent on Monday.
U.S. light crude was up 15 cents at $68.21 a barrel. It lost 4.2 percent on Monday.
« The perception in the oil market seems to be shifting, » Carsten Menke, commodity research analyst at Swiss private bank Julius Baer, said.
« Fears of shortages, which pushed prices as high as $80 per barrel in early summer, are receding and concerns about looming surpluses growing. »
Oil prices have fallen by almost 10 percent over the last week as crude export terminals in Libya have reopened and exports from other OPEC countries and Russia have improved.
Also undermining prices is concern the growing trade war between the United States and other major trading blocs, particularly, China, could dampen economic activity and hence squeeze oil demand.
China this week reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Beijing’s state planning agency said on Tuesday it was still confident of hitting its economic growth target of around 6.5 percent this year, despite views that it faces a bumpy second-half as the trade row with Washington intensifies.
Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated, keeping Brent crude in a $70 to $80 per barrel range in the short term.
« Supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus » in the third quarter, the report said.
U.S. oil supply is continuing to rise.
Output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said on Monday.
Production is expected to rise in all seven formations. All shale regions except for Appalachia are at a high.
But supply disruptions continue elsewhere.
While Libyan ports are reopening, output at its Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said.