Oil prices steady from steep losses on demand fears, higher OPEC+ output

Investing.com-- Oil prices moved little in Asian trade on Tuesday, steadying from a sharp tumble in recent sessions as markets fretted over increased production and deteriorating demand amid increased global economic headwinds.

Threats of more U.S. sanctions on Russian oil buyers did little to stem crude’s decline, while strength in the dollar also weighed.

Brent oil futures for September fell 0.1% to $68.72 a barrel, while West Texas Intermediate crude futures fell 0.1% to $65.23 a barrel by 21:23 ET (01:23 GMT). 

Oil battered by oversupply concerns, demand fears

Brent and WTI futures sank to a one-week low as oil prices were hit by persistent concerns over increasing supply.

The Organization of Petroleum Exporting Countries and allies (OPEC+) over the weekend agreed to hike production by 547,000 barrel per day for a second consecutive month. 

The move was the latest in a series of production hikes by the cartel this year, as it seeks to unwind production cuts over the past three years, while also reclaiming a greater share of the oil market. 

The OPEC+ hike points to increased supply in the coming months, despite concerns over deteriorating demand as global economic growth cools.

Weak nonfarm payrolls data from the U.S. was a major point of concern for oil markets, as they feared a demand slowdown in the world’s biggest fuel consumer. The data added to uncertainty over the U.S. economy, especially as markets feared the impact of U.S. President Donald Trump’s trade tariffs. 

Dismal purchasing managers index data from top oil importer China also weighed on oil last week, as the country logged a bigger-than-expected contraction in manufacturing activity. 

Some resilience in the dollar weighed on crude, although this was offset by weak U.S. economic data.

Russia oil buyer sanctions in focus 

Still, oil marked some gains last week after Trump threatened to impose even more sanctions on Russian oil over the country’s long-running war with Ukraine.

Trump had recently threatened to tariff Russia’s biggest oil buyers– China and India.

The U.S. president had last week slapped a 25% tariff on India, and warned of a bigger penalty if the South Asian country did not immediately cease its buying of Russian crude. 

Trump repeated this threat on Monday.

The prospect of more U.S. sanctions against Russia offered some support to oil prices, given that such a move could further limit global supplies.