LONDON (Reuters) – Oil prices rose on Monday despite worries about a global economic slowdown and the ongoing U.S.-China trade war, which has reduced demand for commodities such as crude.
FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford/File Photo
International benchmark Brent crude futures were at $58.75 a barrel by 1340 GMT, up 22 cents from their previous settlement.
U.S. West Texas Intermediate (WTI) futures were at $55.10 per barrel, up 60 cents from their last close.
Both benchmarks had fallen earlier in the day, with Brent hitting a session low of $57.88 and WTI a session low of $53.54.
“What we have noticed recently is a different perception of risk in different geographies,” said Emily Ashford, executive director of energy research at Standard Chartered.
“Often the price reactions during Asia or London trading are reversed during U.S. trading. Prices seem to be following that pattern today.”
The third quarter is fundamentally the strongest season for oil demand as drivers take to the roads for summer holidays, but the trade dispute between the United States and China has weakened demand and pressured oil prices.
U.S. President Donald Trump said on Friday he was not ready to make a deal with China and even called a September round of trade talks into question.
Germany’s Ifo economic institute said its quarterly survey of nearly 1,200 experts in more than 110 countries showed that its measures for current conditions and economic expectations have worsened in the third quarter.
However, Kuwait’s Oil Minister Khaled al-Fadhel said fears of a global economic downturn were “exaggerated” and global crude demand should pick up in the second half, helping to gradually reduce oil inventories.
OPEC members continue to cut production to drain global oil stocks, with the Saudis cutting more than their agreed quota, but analysts said more reductions were needed to support prices due to a fall in demand and non-OPEC supply growth next year.
“If OPEC cuts are merely extended through 2020, prices are going to fall further from current levels,” Bernstein Energy said in a note on Monday.
“We believe that OPEC needs to cut by a further one million barrels per day in 2020 if they are to defend oil prices at $60 a barrel.”
(Graphic: Global oil demand growth link: tmsnrt.rs/2YFYbzG).
The International Energy Agency (IEA) said on Friday mounting signs of an economic slowdown had caused global oil demand to grow at its slowest pace since the financial crisis of 2008.
India’s imports of crude oil have also stalled in recent months, tallying with weaker economic growth in the country.
(Graphic: INDIA ENERGY IMPORTS link: tmsnrt.rs/2YEZb6V).
Additional reporting by Jane Chung in Seoul; Editing by David Holmes, Jan Harvey, Kirsten Donovan