Oil mixed on crude demand fears and U.S.-Iran tensions
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NEW YORK (Reuters) – Oil prices were mixed on Monday as market concerns about the possibility of a conflict between the United States and Iran eased, while worries about declining crude demand resurfaced.
FILE PHOTO: Flames emerge from the flare stacks at the West Qurna-1 oilfield, which is operated by ExxonMobil, near Basra, Iraq June 1, 2019. REUTERS/Essam Al-Sudani/File Photo
Benchmark Brent crude futures settled at $64.86 a barrel, losing 34 cents, or 0.5%. U.S. crude futures settled at $57.90 a barrel, rising 47 cents, or 0.8%.
Last week, Brent climbed 5% and U.S. crude surged 10% after Iran shot down a U.S. drone on Thursday in the Gulf, adding to tensions stoked by attacks on oil tankers in the area in May and June that Washington has blamed on Iran, which denies having any role in the attacks.
U.S. President Donald Trump imposed new sanctions on Iran on Monday. Trump on Friday, however, called off a retaliatory attack on the Middle East nation at the last minute after the drone was downed, limiting oil price gains.
“I think some of the risk premium that got built in because of U.S. tensions with Iran is easing a bit,” said John Kilduff, a partner at Again Capital Management in New York. “I think we’re also starting to see the economic concerns and demand concerns re-emerge for the market.”
Hopes are waning for progress in Sino-U.S. trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping.
“The most important factor weighing on the oil price of late was the fear of a massive slowdown in demand growth, especially in view of the trade conflict between the US and China,” Commerzbank said in a note. “We do not expect any agreement to be reached during the meeting between Presidents Trump and Xi during the G20 summit at the end of the week.”
Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas added to worries about slipping demand for crude oil.
Supply is expected to remain relatively tight, as the Organization of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, appear likely to extend a deal on curbing output when they meet on July 1-2 in Vienna, analysts said.
Russian Energy Minister Alexander Novak said on Monday that international cooperation on crude production had helped stabilize oil markets and was more important than ever. He also voiced concerns about demand.
Reporting by Laila Kearney in New York; Additional reporting by Noah Browning in London; Editing by David Gregorio and Matthew Lewis