Crude oil prices fall 1% on fears for global economy

Brent oil ticked higher today, supported by tensions over Iran and the decision by OPEC and its allies to extend a supply cut deal until next year, while US benchmark crude prices fell on weak economic indicators.

Brent was up 53 cents at $63.83 per barrel this afternoon, while US West Texas Intermediate (WTI) slipped 18 cents to $57.16. The US market was closed yesterday for a holiday.

Both benchmarks were set for their biggest weekly falls in five weeks.

A trade war between the US and China has dampened prospects of global economic growth and oil demand, but talks between the two nations resume next week in a bid to resolve the deadlock.

“The truce between the US and China is not translating into anything in the real economy in the short term.

German industrial orders fell far more than expected in May, and the Economy Ministry said this sector of Europe’s largest economy was likely to remain weak in the coming months.

In the US, new orders for factory goods fell for a second month in May in a row, government data showed, stoking the economic concerns.

The U.S. Energy Information Administration reported this week a weekly decline of 1.1 million barrels in crude stocks, smaller than the 5 million barrel draw reported by the American Petroleum Institute and less than analyst expectations.

The Organization of the Petroleum Exporting Countries and other producers such as Russia, a grouping known as OPEC+, supported prices by extending their deal on supply cuts.

Tension in the Middle East also offered some support.

Iran, already embroiled in a row with the US, threatened today to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria.

A Reuters survey found OPEC oil output sank to a new five-year low in June, as a rise in Saudi supply did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere in the group.

Oil production by Saudi Atabia, the world’s top crude exporter, was 9.782 million barrels per day (bpd) in June, an OPEC source said, slightly up from 9.67 million bpd in May.

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