Crude oil futures drifted lower and recorded their lowest settlement in over 2 months on Tuesday, as demand growth concerns continued to weigh on the commodity.
With global oil production rising and the market moving towards a situation where supply may well overrun demand, traders are wary of building up positions in crude futures.
The American Petroleum Institute is scheduled to come out with its weekly oil report later in the day and the U.S. Energy Information Administration is slated to release its inventory data on Wednesday morning.
It is widely expected that U.S. crude stockpiles may have risen in the week ended October 26, increasing for a sixth successive week.
Crude oil futures for December ended down $0.86, or 1.3%, at $66.18 a barrel. On Monday, oil futures ended lower by $0.55, or 0.8%, at $67.04 a barrel.
It is feared that the escalation of U.S.-China trade conflict will hurt global economic growth, which in turn could result in a significant drop in demand for crude. Trade fears have increased after the U.S. President Donald Trump said that he thinks there will be a “a great deal” with China on trade, but warned of more tariffs if talks next month fail to ease the trade war.
Meanwhile, BHP Billiton, a big miner with huge oil and gas assets as well, has cut its forecast for global growth for the next two years, citing risk from the ongoing U.S.-China trade dispute.
The International Energy Agency has also warned that fuel demand may fall in the near term. Also, there are concerns about excess supply in the market as Saudi Arabia and Russia indicated last month that they will increase output from September through December.