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Oil prices fall amid economic slowdown, despite ongoing OPEC supply cuts

June 04/ 07:03

Singapore. 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,informs Reuters.

“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.

Oil prices were pressured on Tuesday by an economic slowdown that has started to impact fuel consumption, although some support came from a Saudi Arabian statement that consensus was emerging with other producers over extending supply cuts.

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