Oil prices slipped on July 2 as concerns that the global economy could be slowing outweighed an agreement by OPEC and allies, including Russia, to extend supply cuts until next March.
Brent crude futures were down 15 cents, or 0.23%, at $64.91 a barrel by 1110 GMT.
U.S. crude futures for August were down 12 cents, or 0.20%, at $58.97 a barrel, after touching their highest in more than five weeks on Monday.
The Organization of the Petroleum Exporting Countries along with other top producers, including Russia, agreed on July 2 to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.
The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.
Iran also supported the extension, but warned that OPEC could ‘die’ if reduced to a rubber stamp, Business Standard reported.
Meanwhile, U.S. crude oil stockpiles were seen falling for a third consecutive week, a preliminary Reuters poll showed on Monday, also supporting prices.
But signs of a global economic slowdown which may hit oil demand growth, means OPEC and its allies may face an uphill battle to shore up prices by reining in supply.
“It was the bare minimum OPEC could agree on in order to prevent a major meltdown in prices. Member countries noted that global oil demand growth for this year has fallen to 1.14 mbpd whilst non-OPEC supply is expected to grow by 2.14 mbpd,” PVM analyst Tamas Varga wrote in a note.
“It appears that the supply side of the oil equation is supportive for oil prices but demand concerns are forcing oil bulls to keep at least part of their gunpowder dry.”
The United States and China agreed at the G20 leaders summit to restart trade talks, but factory activity shrank across much of Europe and Asia in June while growth in manufacturing cooled in the United States.
Asian shares wobbled on Tuesday, U.S. Treasury yields fell and gold rebounded, while a tweet by U.S. President Donald Trump saying any trade deal with China would need to be “somewhat tilted” in favour of Washington also stoked doubt over prospects for a trade deal between the top two economies.
“Oil traders will now turn their attention to the economic data, as the weakening global activity and waning demand could again weigh on the sentiment”, Ipek Ozkardeskaya, senior market analyst at London Capital Group, said in a note.