Oil prices slip as supply worries and US-China tensions weigh on sentiment

WEB DESK: Oil prices edged lower on Tuesday as fears of oversupply and weak demand lingered amid rising tensions between the United States and China, the world’s two largest oil consumers.

Brent crude futures dropped 14 cents, or 0.2 percent, to $60.87 a barrel at 0005 GMT, while the US West Texas Intermediate (WTI) November contract, due to expire later in the day, eased 0.1 percent to $57.45. The more active December contract slipped 13 cents to $56.89.

Trade deal hopes fail to lift sentiment

US President Donald Trump said on Monday that he expected to reach a “very strong” trade deal with Chinese President Xi Jinping during their meeting in South Korea next week. Despite his optimism, markets remained cautious as disputes over tariffs, technology transfers and market access continue to cloud the talks.

“I think we’ll end up with a very strong trade deal. Both of us will be happy,” Trump said.

Analysts at Ritterbusch and Associates noted that crude oil’s short-term outlook remains bearish. “The near-term trading stance on crude remains negative, favouring selling into price advances rather than buying pullbacks,” the firm said in a note. However, it added that ongoing geopolitical uncertainty could still provide occasional support to prices.

Supply disruptions add to volatility

Fresh concerns about supply disruptions also surfaced. In Russia, the Novokuibyshevsk refinery, controlled by Rosneft, halted crude processing on Sunday after a reported drone attack. A separate strike on the Orenburg gas plant prompted neighbouring Kazakhstan to slash output at its Karachaganak oil and gas field by 25 to 30 percent.

Meanwhile, uncertainty over Russian exports deepened after Trump warned that India could face “massive” tariffs if it continued to buy Russian crude. India has been one of the biggest importers of discounted Russian oil since Western sanctions were imposed on Moscow.

Oversupply fears persist

Adding further pressure, a Reuters poll suggested US crude inventories likely rose last week, ahead of data from the American Petroleum Institute and the Energy Information Administration.

Market sentiment also took a hit after the International Energy Agency projected a potential global oil surplus of nearly 4 million barrels per day by 2026. The agency said increased production from OPEC+ and other producers could outweigh demand growth as the global economy slows.

For now, traders appear cautious, weighing the possibility of fresh supply shocks against a growing sense that demand may not recover fast enough to absorb rising output.