Oil fell for the second straight day on Tuesday amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while rising U.S. inventories also jangled nerves.
West Texas Intermediate (WTI) crude dropped 27 cents or 0.47 percent to $56.78 a barrel by 0549 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose.
Brent crude futures were down 20 cents, or 0.32 percent, at $62.24.
A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump’s comment that there was no agreement on phasing out tariffs.
“We had reports overnight that the mood in Beijing was pessimistic,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.
“The lack of announcement is really concerning for the demand outlook … the market is very nervous about the trade talks.”
The lingering trade battle that has seen the world’s two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand.
Meanwhile a preliminary Reuters poll on Monday showing U.S. crude oil stockpile were seen rising for the fourth straight week also squeezed prices.
The American Petroleum Institute is scheduled to release its data for the latest week at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the Energy Information Administration’s official weekly report is due on Wednesday.
“Unless we get further concrete signs of global growth rally or an extension in production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and associated producers including Russia), WTI will struggle to attempt to recapture the $60-a-barrel mark,” said Edward Moya, senior market analyst at OANDA in New York.
One possible factor supporting prices going forward was a renewal in geopolitical tensions, with news from Dubai that armed members of Yemen’s Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend.