Oil prices were mixed overnight as market concerns about the possibility of a conflict between the United States and Iran eased while worries about declining crude demand resurfaced.
Benchmark Brent crude futures settled at $US64.86 a barrel, losing 34 US cents, or 0.5 per cent.
US crude futures settled at $US57.90 a barrel, rising 47 US cents, or 0.8 per cent.
Last week, Brent climbed five per cent and U.S. crude surged 10 per cent after Iran’s army shot down a US spy drone on Thursday in the Gulf, adding to tensions stoked by attacks on tankers in the area in May and June that US officials blamed on the Iranian government, which denies having any role in the attacks.
US President Donald Trump imposed new sanctions on Iran on Monday.
Trump on Friday, however, called off a retaliatory attack on the country at the last minute after the drone was downed, limiting oil price gains.
“I think some of the risk premium that got built in because of US tensions with Iran is easing a bit,” said John Kilduff, a partner at Again Capital Management in New York.
“I think we’re also starting to see the economic concerns and demand concerns re-emerge for the market.”
Hopes are waning for progress in Chinese-US trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping.
“The most important factor weighing on the oil price of late was the fear of a massive slowdown in demand growth, especially in view of the trade conflict between the US and China,” Commerzbank said in a note.
“We do not expect any agreement to be reached during the meeting between Presidents Trump and Xi during the G20 summit at the end of the week.”
Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas added to worries about slipping demand for crude oil.
Supply is expected to remain relatively tight as the Organisation of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, appear likely to extend a deal on curbing output when they meet on July 1-2 in Vienna, analysts said.
Russian Energy Minister Alexander Novak said on Monday that international co-operation on crude production had helped stabilise oil markets and was more important than ever.
He also voiced concerns about demand.