Oil prices fell on Tuesday on lingering concerns over global demand and rising US production, though expectations for major producers to further curtail output offered support.
Brent crude futures LCOc1 were down 20 cents or 0.3% from the previous settlement at $58.29 a barrel by 0643 GMT. The international benchmark has lost over 20% since hitting its 2019 high in April.
US West Texas Intermediate (WTI) CLc1 futures were at $54.69 per barrel, down 24 cents or 0.4%.
A deepening trade war between the United States and China, the world’s two largest economies and energy consumers, has weighed heavily on oil prices in recent months.
China’s central bank lowered its official yuan midpoint for the ninth straight day to a fresh 11-year low on Tuesday. A weaker yuan raises the cost of dollar-denominated oil imports into China, the world’s biggest crude oil importer.
Saudi Arabia, the de-facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said last week it plans to keep its crude exports below 7 million barrels a day in August and September to help drain global oil inventories.
The kingdom’s plans to float its national oil company Saudi Aramco in what could be the world’s largest initial public offering (IPO) give it further impetus to boost prices.
“With Saudi Aramco reportedly eyeing an IPO once again, there is some support to the idea that Saudi Arabia has a heightened interest in strong crude prices and will cut its own output accordingly,” Vienna-based consultancy JBC Energy said.
OPEC and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) of production since January 1.
But booming US shale oil output continues to chip away at efforts to limit the global supply overhang, weighing on prices.
US oil output from seven major shale formations is expected to rise by 85,000 barrels per day (bpd) in September to a record 8.77 million bpd, the Energy Information Administration forecast in a report.
The start-up of a major pipeline between the Permian shale basin and the Gulf Coast means that more crude can be exported, adding to global supplies.
“The swift reaction from Saudi Arabia will likely stabilize oil prices, but the oil price probably won’t move much above $60 per barrel until there is evidence of progress in US-China trade negotiations,” Stephen Innes, managing partner at VM Markets Pte Ltd, said in a note.