Oil fell overnight as US trade disputes with Mexico and China deepened concerns about weakening global crude demand, while a slump in equities also weighed on crude futures.
Brent crude futures settled at $US61.28 a barrel, losing 71 US cents, or 1.2 per cent.
US West Texas Intermediate (WTI) crude ended 25 US cents, or 0.5 per cent, lower at $US53.25 a barrel.
Mexico said it would reject a US idea to take in Central American asylum seekers if it is raised at talks this week with US President Donald Trump’s administration, which is threatening the tariffs over immigration concerns.
The possibility of tariffs on Mexico comes on top of a drawn-out trade war between the United States and China that has bruised oil prices.
“Focus has shifted from the supply to the demand side as a US-China trade agreement has proven elusive and as worries over the debilitating effects of tariffs on global economic growth have now shifted to Mexico,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
A downturn on Wall Street, which crude prices sometimes follow, worsened losses in oil futures, analysts said.
Comments from Saudi Arabia, OPEC’s de facto leader, indicating that the Organisation of the Petroleum Exporting Countries and its allies would continue working towards oil market stability in the second half of the year, helped limit Monday’s loses.
“We will do what is needed to sustain market stability beyond June. To me, that means drawing down inventories from their currently elevated levels,” Energy Minister Khalid al-Falih was quoted as saying by the Saudi-owned Arab News newspaper.
Brent futures have dropped almost 20 per cent from their 2018 peak as global supplies tighten following output curbs by OPEC and Russia, as well as a reduction in Iranian and Venezuelan exports due to U.S. sanctions.
The recent sell-off in crude will likely solidify Saudi Arabia’s intention to maintain output reductions, analysts said.
“This sell-off has to have gotten their attention yet again and is precluding them from increasing production,” said John Kilduff, an analyst at Again Capital LLC.
Saudi Arabia pumped 9.65 million barrels of oil per day (bpd) in May, a deeper cut than its production target under the global pact to reduce oil supply, a Saudi oil industry source said.
The country’s output target under the OPEC-led pact is 10.3 million bpd.