Oil prices have declined as investors are cautious of trade slowdown sentiment after a decrease in financial markets last week and strength in dollar early this week triggered worries that growth may witness a fall, especially in emerging economies of Asia.
Front-month Brent crude oil futures were trading down 46 cents at $77.16 a barrel, while US West Texas Intermediate (WTI) crude futures declined 40 cents and traded at $67.19 a barrel, Reuters reported.
Futures brokerage FXTM chief market strategist Hussein Sayed was quoted by the news agency as saying: “The bears seem well in control of the market and there are many reasons to justify their actions.”
Sayed added that the primary reasons for the selloffs are ‘weakening global economic growth, the ongoing US-China trade war, monetary policy tightening, fears of a hard Brexit (and) Italy’s budget woes’.
According to Singapore-based ship tanker brokerage Eastport, financial market turmoil may ‘weigh on investment and consumer spending, reducing trade flows and ultimately hitting demand’.
With rates for dry-bulk and container ships coming under pressure, global trade is further set for a slowdown.
Oil markets remain tense ahead of looming US sanctions against Iran’s crude exports, which are set to begin next week.
Once the sanctions are in place, supplies are expected to be tightened, especially to Asia, which takes most of the shipments from Iran.
News website SHANA reported that Iran started the sale of crude to private companies through a domestic exchange for the first time to keep up some exports.
Refinitiv Eikon ship-tracking data revealed that only four stationary supertankers are currently filled with crude oil, representing a decline from around 15 last year.
Drillers in the US added two oil rigs in the week ending 26 October, bringing the total count to 875, according to Baker Hughes.