Oil prices fell on Monday after data suggested inventories at the US crude delivery hub rose in the latest week, compounding worries that troubled emerging markets and trade tensions will dent the outlook for fuel demand.
Benchmark Brent crude oil was down 60 cents a barrel at $71.86 by 1325 GMT.
Around two-thirds of US oil producers failed to balance costs in the second quarter, despite crude oil prices rising above $70 per barrel, the Wall Street reports.
"Adding to the weakening price backdrop are signs that a deepening trade spat between the United States and China is undermining oil demand".
Investors are concerned by the health of the world economy at a time of escalating trade disputes between the United States and its major trading partners. That could take more than a million barrels of Iranian oil out of global circulation, which could then push oil prices higher again.
Crude slid as economic turbulence in Turkey and the strengthening greenback heightened concerns about global oil demand. "If the crisis spread to other, larger (emerging) countries, though, demand would be hit considerably".
Hedge funds and other money managers cut their bullish positions on United States crude to the lowest level since June, data showed on Friday. In America, the number of oil rigs rose to the highest in more than three years, according to data from Baker Hughes on Friday.
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BMI Research said oil markets would "struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the USA and China persists".
Meanwhile the market is worrying about supply from Venezuela and preparing for the last round of USA sanctions against Iran, which will target its oil industry specifically.
While concerns about scarce oil supplies have receded after Saudi Arabia and other producers pumped more, the International Energy Agency warned that renewed American sanctions on Iran and disruptions elsewhere could be challenging.
For example, Pioneer Natural Resources Co., one of the biggest operators in the Permian Basin of West Texas and New Mexico, promised a year ago that "efficiency gains" will cover rising operating costs.
Iran's oil exports peaked at nearly 3 million bpd in May this year, but they have since fallen to around 2 million bpd as Asian buyers, including Japan, South Korea and India, began to shun its crude ahead of the sanctions. This article is strictly for informational purposes only.
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