Oil prices tumbled on Thursday as the market confronted concerns that global demand growth would lag in the coming year.
A rebound from late December lows seemed to stall amid worries that a trade war between the U.S. and China would continue, weighing on demand. The market also contended with the possibility that oil producers would not adhere strictly to cuts agreed to last year.
Crude futures fell with the stock market. The Dow Jones Industrial Average droppedmore than 250 points after a senor administration official told CNBC a meeting between President Donald Trump and President Xi Jinping is highly unlikely to take place before a critical March deadline to avoid higher U.S. tariffs on Chinese goods.
U.S. West Texas Intermediate (WTI) crude futures settled $1.37 lower at $52.64 a barrel for a or 2.5 percent loss. International Brent crude oil futures fell $1.05 a barrel, or 1.7 percent, to $61.64 around 2:30 p.m. ET.
"The correction is stalled, mainly on concerns about demand growth," said Gene McGillian, director of Market Research at Tradition Energy in Stamford, Connecticut. "There seems to be uncertainty about what is going to happen with the trade talks, with global economic growth and demand in the coming year," he said.
In particular, he said, the market is worried about whether demand is sufficient to absorb growing crude production from the U.S.
"Supply fundamentals have increasingly been turning supportive in recent weeks, but against this the market still worries about the yet-to-be-realized if at all impact on demand from weaker macroeconomic fundamentals," said Ole Hansen, head of commodity strategy at Saxo Bank.
Though the United States published robust jobs data last week, global markets remain nervous after China reported the lowest annual economic growth in nearly 30 years in January. That focuses yet more attention on the outcome of U.S.-China talks to end the trade war between the world's top two economies.
The oil price also came under pressure as weekly data published by the U.S. Energy Information Administration on Wednesday showed an unwelcome increase in stocks of crude oil.
A decline in OPEC production and a squeeze on supply from Iran and Venezuela because of U.S. sanctions have led many analysts to forecast that the market will be balanced in 2019.
The oil price is showing a 20 percent gain so far this year.
Price support is provided by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) to tighten the market.