Oil prices have dropped more than one per cent on signs of rising supply and concern that global economic growth and demand for fuel will fall victim to the US-China trade war.
Brent crude futures fell $US1.43 to settle at $US75.91 a barrel, a 1.85 per cent decline.
US West Texas Intermediate crude futures fell 86 cents to settle at $US66.18 a barrel, a 1.28 per cent drop.
Earlier in the session, Brent reached a session low of $US75.09 a barrel, the lowest since August 24.
WTI slumped to $US65.33 a barrel, the weakest since August 17.
Both contracts have fallen about $US10 a barrel from four-year highs reached in the first week of October.
Prices were pressured as US inventories were expected to rise for a sixth straight week as other top producers Saudi Arabia and Russia signalled potential output increases.
Oil has been caught in the global financial market slump this month, with equities under pressure from the trade fight between the world’s two largest economies.
The United States has imposed tariffs on $US250 billion worth of Chinese goods, and China has responded with retaliatory duties on $US110 billion worth of US goods.
US President Donald Trump said on Monday he thinks there will be ‘a great deal’ with China on trade but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible.
Trump said he would like to make a deal now but that China was not ready.
He did not elaborate.
‘One discussion that is developing is that (trade tensions) are hurting demand for crude oil,’ said Bob Yawger, director of futures at Mizuho in New York.
There’s probably an element of truth to that.’
The International Energy Agency on Tuesday said high oil prices were hurting consumers and could dent fuel demand at a time of slowing global economic activity.
Oil production from Russia, the United States and Saudi Arabia reached 33 million barrels per day for the first time in September, Refinitiv Eikon data showed.
That is an increase of 10 million bpd since the start of the decade and means the three producers alone now meet a third of global crude demand.
Investors awaited industry data on US crude inventories.
Stockpiles were expected to have risen about 4.1 million barrels in the week ended October 26, an extended Reuters poll showed on Tuesday.
The United States is set to impose new sanctions on Iranian crude from next week, and exports from the Islamic Republic have already begun to fall.
Saudi Arabia and Russia have said they will pump enough to meet demand once US sanctions are imposed.
‘The fact that this price weakness is developing just ahead of the official kickoff of the Iranian oil sanctions suggests an amply supplied market in which additional supply was brought to market well in advance of a likely acceleration in Iranian export decline,’ Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.