Oil prices inched lower on Tuesday as the International Energy Agency (IEA) said it would act quickly if needed to keep the market supplied amid tensions in the Middle East and traders eyed a weaker demand outlook.
Brent crude LCOc1 futures slipped 2 cents to $63.24 a barrel by 0121 GMT.
The international benchmark rose more than 1% in the previous session, following Iran’s seizure of a British tanker last week that stoked fears of supply disruptions from the energy-rich Gulf.
West Texas Intermediate (WTI) crude CLc1 futures were down 6 cents, or 0.11% at $56.16 per barrel.
The International Energy Agency (IEA) said it was closely monitoring developments in the Strait of Hormuz.
“The IEA is ready to act quickly and decisively in the event of a disruption to ensure that global markets remain adequately supplied,” it said, adding that executive director Fatih Birol has been in talks with IEA members, associate governments and other nations.
“Consumers can be reassured that the oil market is currently well supplied, with oil production exceeding demand in the first half of 2019, pushing up global stocks by 900,000 barrels per day,” the IEA said in a statement.
The potential for disruption in the Middle East has come amid a more fundamental souring of market sentiment in recent days, with hedge funds, producers and traders all taking a more bearish tack in response to what they see as weakness in worldwide demand.
“Lower global demand estimates from OPEC, IEA and EIA have hit crude prices in the last couple of weeks,” said Alfonso Esparza, senior market analyst at OANDA.
“Weather and geopolitical disruptions have been temporary and only the OPEC+ deal has given traders clarity with the group’s commitment to reducing the oil glut at their expense.”
The Organization of the Petroleum Exporting Countries (OPEC) and some non-affiliated producers including Russia, known collectively as OPEC+, have withheld supplies since the start of the year to prop up prices.
Adding to pressure on prices, Libya’s National Oil Corp lifted a force majeure on loadings at the country’s largest Sharara oilfield, which had been closed since Friday.
Meanwhile, US oil output from seven major shale formations is expected to rise by about 49,000 barrels per day (bpd) in August, to a record 8.55 million bpd, the US Energy Information Administration said last week.