SINGAPORE: Oil prices slipped on Tuesday (Jul 2) as worries that a weakening global economy would dent demand for the commodity outweighed the Organisation of the Petroleum Exporting Countries' (OPEC) decision to extend supply cuts until next March.
Brent crude futures for September delivery had dropped 33 cents, or 0.5 per cent, to US$64.73 a barrel by 0034 GMT. They climbed more than US$2 a barrel on Monday before paring gains later in the day.
US crude futures for August had fallen 48 cents, or 0.8 per cent, to US$58.61 a barrel, after touching their highest in over five weeks on Monday.
"After 2 and a half years of production cuts, the effects of rolling over production cuts is losing steam," said Edward Moya, senior market analyst at OANDA in New York, adding that markets remained nervous on how demand will pan out over the next few months.
"The trade war is not likely to get resolved any time soon and while central banks globally are expected to deliver fresh stimulus in the coming months, economic activity is continuing to trend lower."
The US-China trade conflict has pressured global markets, stoking worries about demand for commodities such as crude oil.
OPEC agreed on Monday to extend oil supply cuts until March 2020 as the group's members overcame their differences in order to try to prop up the price of crude.
OPEC is slated to meet with Russia and other producers, an alliance known as OPEC+, later on Tuesday to discuss supply cuts amid surging US output.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend global output cuts of 1.2 million barrels per day, or 1.2 per cent of world demand, until December 2019 or March 2020.
Russia reduced oil production in June by more than the amount agreed in a global deal to cut output, the energy minister and industry sources said on Monday, as the sector still felt the impact of a contaminated crude crisis that crippled exports.
Oil prices have also come under renewed pressure in recent months from rising US supplies.
US producers hit a monthly record of 12.2 million barrels per day in April, the latest available data showed, though new US shale oil production is expected to slip this year from last year, according to a survey of major forecasters.