Oil prices fell on Wednesday, swept lower by a broad decline across financial markets, as concern about the outlook for global growth and evidence of yet more crude supply wiped out half of this week’s gains.
The Organization of the Petroleum Exporting Countries (OPEC), with partner countries such as Russia, meets on Thursday to discuss a potential cut in crude output.
In the face of a growing supply overhang, it will be keen to avert the kind of build-up in global oil inventories that sent prices on a 19-month long decline starting in late 2014.
After reaching a truce on trade over the weekend, the United States and China appeared once again to be at loggerheads after President Donald Trump threatened “major tariffs” on Chinese imports if the two failed to reach an effective deal.
Stock markets tumbled, taking cyclical assets such as oil with them, as the renewed tension rekindled fears of a global recession. Those concerns were reflected by a sharp drop in longer-term U.S. Treasury yields.
Brent crude futures LCOc1 were down 28 cents on the day at $61.88 a barrel by 1024 GMT, while U.S. crude futures CLc1 were down 26 cents at $52.40.
The oil price rallied by nearly 10 percent over Monday’s and Tuesday’s sessions, but has now retraced half of those gains.
“Oil sentiment is very fragile given clear event risk at play,” Harry Tchilinguirian, head of commodity strategy at BNP Paribas told the Reuters Global Oil Forum.