Oil prices fall 1% as global demand concerns grow

[NEW YORK] Oil prices fell nearly 1 per cent on Monday after comments from a US official fed concerns surrounding the US-China trade war, adding to worries that a slowing global economy would reduce demand for oil.

Brent crude futures fell 46 cents, or 0.8 per cent, to settle at US$58.96 a barrel. US West Texas Intermediate (WTI) crude futures fell 47 cents, or 0.9 per cent, to settle at US$53.31 a barrel.

Although President Donald Trump has said he would like to sign a deal when he meets his Chinese counterpart at November's Apec summit, the US commerce secretary said an initial trade deal does not need to be finalized next month.

"The key thing is to get everything right that we do sign. That's the important element. That's what the president is wedded to," Wilbur Ross said, after being asked if he would mind skipping an Apec signing.

US Trade Representative Robert Lighthizer told reporters that the administration's target is still to finish phase one by the time the Apec meetings take place in Chile on Nov 16 and 17. He added there are outstanding issues to resolve.

Adding to tensions, China is seeking US$2.4 billion in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating back to the era of President Barack Obama, a document showed.

"The complex remains trapped in a tight trading range amidst an ongoing tug of war between the supportive influence of a steady equity trade and the bearish influence of continued concerns over a major trade war that could force further slowing in global economic growth," Jim Ritterbusch, president of Ritterbusch and Associates, said in a report.

On the supply side, Russia, the world's second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output ahead of winter.

The Organization of the Petroleum Exporting Countries, Russia and other oil producers, an alliance known as Opec+, agreed in December to cut supply by 1.2 million barrels per day (bpd).

"Russia intends to fully comply with the agreed production cut in October, though it is reasonable to doubt whether this will actually be achieved," Commerzbank analyst Carsten Fritsch said.

European refinery production in September fell 4 per cent from the previous month and 4.2 per cent year-on-year, data from Euroilstock showed on Monday. Production hit 10.451 million barrels per day (bpd), with output declining across all refined products.

Offering some encouragement, European shares opened slightly higher as investors remained hopeful Britain would avoid a disorderly exit from the European Union.

Analysts have said any British-EU agreement that avoids a no-deal Brexit should boost economic growth and oil demand.

REUTERS