WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Intercontinental Exchange Brent turned lower Monday morning, extending week prior losses as the new round of tariffs in the United States-China trade war reignite concerns over global growth and fuel demand.
Near 9 a.m. ET, September West Texas Intermediate crude futures slid 83 cents to $54.83 per barrel (bbl) while the October ICE contract dropped near $1 to $60.95 bbl.
NYMEX spot month RBOB futures slid 2.78 cents to $1.7537 gallon and the September ULSD contract shed 2.74 cents to $1.8628 gallon.
Oil demand could be slashed by a quarter next year, if the U.S.-China trade spat continues to weigh on the global markets, according to Bank of America Merrill Lynch analysts. U.S. President Trump slapped a 10% levy on $300 billion worth of Chinese goods and services last week, sending shockwaves through the global financial and commodity markets.
Crude prices tumbled 4% in the first fifteen minutes after the announcement, while shedding as much as 7% during the market-crushing trading session. Market analysts were quick to highlight the outsized effect such demand shock will have on the direction of oil prices amid continued downward revisions to global fuel consumption since the beginning of the year. The International Energy Agency recently downgraded its demand forecasts from 1.4 million barrels per day (bpd) in the first half of 2019 to just 560,000 bpd for the profiled period, according to the latest monthly oil market report. The Paris-based energy watchdog will update its forecast estimates Friday (8/9), with most analysts expecting a deeper cut to demand growth estimates.
Looking ahead to a busy week for market data, the U.S. Energy Information Administration will publish its monthly Short-Term Energy Outlook report midday Tuesday (8/6) while the Organization of the Petroleum Exporting Countries will delay its monthly market statistics until Friday, Aug. 16 due to Eid al-Adha holiday.
Meanwhile, Saudi Arabia's Energy Minister reassured investors that major oil producers will continue to cooperate on 1.2 million bpd cuts until the first quarter 2020. According to Reuters, Al-Falih travelled to Moscow this past weekend to discuss the markets with his Russian counterpart in the aftermath of heightened trade tensions between the U.S.-China. Analysts believe that the case for even deeper cuts from OPEC group strengthened significantly last week, as producers will be seeking to offset the lost demand volumes.
Liubov Georges can be reached at email@example.com
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