Oil prices dropped on Tuesday in Asia as signs continue to point to a global economic slowdown affecting oil demand.
Crude Oil WTI Futures were at $53.14 per barrel, down by 0.19% at 12:16 AM ET (4:16 GMT). Crude futures are now around 20% below their peaks of late April 2018.
Brent Oil Futures, the international benchmark for oil prices, were at $61.06, having dropped 0.36%.
Analysts said the global economic slowdown is starting to affect oil demand.
“Slowing economic activity now threatens to derail our base case of robust cyclical (oil) demand growth,” said Bank of America Merrill Lynch (NYSE:BAC) in a statement cited by Reuters.
Data showed on Tuesday that South Korea’s economy slimmed down by 0.4% in the first quarter while core inflation slowed to a near 20-year low in May, adding more evidence for an extended economic slowdown in Asia.
Ole Hansen, head of commodity strategy at Saxo Bank, also said that “an escalation of the U.S.-China trade war has added further downside risks to already slowing economies”, reported Reuters.
In other news, the Organization of the Petroleum Exporting Countries (OPEC), together with Russia, have strongly hinted that there will be extended production cuts to support oil prices.
The group and its allies have been curbing supply since the start of the year, and will decide later this month or in early July whether to continue withholding production.
OPEC’s de-facto leader, Saudi Arabia, said on Monday that there would likely be continued cuts in the second half of the year to ensure market stability.
“We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” Energy Minister Khalid al-Falih was quoted as saying by the Saudi-owned Arab News newspaper on Monday.
