Oil prices fell on Tuesday, with U.S. crude futures down more than 3%, weighed by manufacturing data that raised concerns about a weakening global economy, while the U.S.-China trade dispute continued to drag on investor sentiment.
U.S. West Texas Intermediate (WTI) crude futures fell $1.91, or 3.5%, to $53.19 a barrel by 11:05 a.m. EDT (1505 GMT). It fell to a session low of $52.84 a barrel, the lowest since Aug. 9.
Prices extended losses following data that showed U.S. manufacturing activity contracted for the first time in three years in August, with new orders and hiring declining as trade tensions weighed on business confidence.
The U.S. numbers came after separate data showing Euro zone manufacturing activity contracted for a seventh month in August as a continued decline in demand sapped optimism.
“That deterioration is continuing to undermine the demand growth outlook for oil,” said John Kilduff, a partner at Again Capital in New York.
Elsewhere, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the U.S.-China dispute, central bank data showed on Tuesday.
Oil prices have fallen around 20% since a 2019 peak reached in April in part because of concerns that the U.S.-China trade war would dent oil demand.
U.S. President Donald Trump said on Tuesday that trade talks between the United States and China were going well, though he warned that he would be “tougher” in negotiations if the discussions drag on until his second term.
Chinese Vice Premier Liu He said on Tuesday that China firmly opposes a trade war as it is not good for it, the United States and the world, the state news agency Xinhua reported.
Washington began imposing 15% tariffs on an array of Chinese imports on Sunday, while China began placing new duties on U.S. crude oil.
The U.S.-China trade dispute “is the single most important flat price driver of late,” said Tamas Varga of oil brokerage PVM.
Though the trade conflict has intensified, Trump said the two sides would meet for talks this month.
Meanwhile, on the supply side, output from the Organization of the Petroleum Exporting Countries rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by U.S. sanctions on Iran.
Russian oil production C-RU-OUT in August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday.
Data due this week on U.S. inventory levels will be delayed by a day to Wednesday and Thursday because of the U.S. Labor Day holiday on Monday.