Oil prices fell on Tuesday amid a global economic slowdown that is starting to hit oil demand, triggering calls in producer club OPEC for supply cuts to be extended.
Front-month Brent crude futures, the international benchmark for oil prices, were at $60.88 at 0038 GMT. That was 40 cents, or 0.7%, below last session’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $52.94 per barrel, down 31 cents, or 0.6%.
Crude oil futures are now around 20% below their 2018 peaks reached in late April.
“Slowing economic activity now threatens to derail our base case of robust cyclical (oil) demand growth,” said Bank of America Merrill Lynch in a note.
South Korea’s economy shrank by 0.4% in the first quarter while core inflation slowed to a near 20-year low in May, data showed on Tuesday, pointing to a further economic slowdown in Asia.
“We project Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020,” Bank of America said.
Oil prices were under downward pressure as “the tight supply focus (is) switching to increased risk of lower growth and demand,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“An escalation of the U.S.-China trade war has added further downside risks to already slowing economies,” he said.
ANZ bank said the price falls came “despite OPEC strongly hinting at further production cuts.”
The Middle East dominated producer club of the Organization of the Petroleum Exporting Countries (OPEC), together with some allies including Russia, has been withholding supply since the start of the year to prop up the market.
The group plans to decide later this month or in early July whether to continue withholding supply. OPEC’s de-facto leader Saudi Arabia said on Monday a consensus was emerging for continued cuts in the second half of the year to ensure market stability.