Oil prices declined for a third consecutive session on Tuesday on concerns the brewing trade war between major crude consumers the United States and the European Union will curb fuel demand growth by reducing economic activity.
Brent crude futures were down 49 cents, or 0.7 per cent, to $68.72 a barrel at 0915 GMT. US West Texas Intermediate crude was at $66.60 a barrel, down 60 cents, or 0.9 per cent.
The August WTI contract expires on Tuesday and the more active September contract was down 47 cents, or 0.7 per cent, to $65.48 a barrel.
“Oil prices fell for a third straight session … as urgency builds in trade negotiations between the US and its partners,” Soojin Kim, an analyst at bank MUFG, said in a note.
The Trump administration has set an August 1 deadline for countries to secure trade deals or face steep tariffs.
The EU is exploring a broader set of possible counter-measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.
The US has threatened to impose a 30 per cent tariff on EU imports if a deal is not reached.
A weaker dollar has limited some losses for crude as buyers using other currencies are paying relatively less.
Prices have slipped “as trade war concerns offset the support by a softer (US dollar),” IG market analyst Tony Sycamore wrote in a note.
Stronger distillate profit margins due to low inventories are also supporting crude prices.
“The move lower might have seen more momentum if it were not for the continued performance in distillates which continues to be aided by low stocks,” PVM Oil analyst John Evans said in a note.
Meanwhile, a Reuters poll of analysts showed U.S. crude oil inventories likely fell by about 600,000 barrels in the week to July 18.
