2019.05.0715:32:00UTC+00Oil Prices Settle Lower As Trade Tensions Escalate

Crude oil prices drifted lower on Tuesday as global growth concerns rose amid rising U.S.-China trade war tensions.

Oil's fall was somewhat limited due to the likely impact on global crude supply amid U.S. sanctions on Iran and Venezuela.

News about the U.S. deploying the USS Abraham Lincoln Carrier Strike Group and a bomber task force to the Middle East to counter "credible threats" hurt as well, although Tehran dismissed the move by as the U.S. as "psychological warfare".

West Texas Intermediate Crude oil futures for June ended down $0.85 or 1.4%, at $61.40 a barrel, thhe weakest settlement price since March 29.

Brent crude oil futures shed $1.31 or 1.8%, at $69.93 a barrel.

On U.S.-China trade front, accusing China of backtracking on commitments in trade talks, the U.S. has threatened to further increase U.S. trade tariffs on Chinese goods.

U.S. Trade Representative Robert Lighthizer confirmed the U.S. plans to raise tariffs on $200 billion worth of Chinese goods to 25% on Friday.

The comments from Lighthizer came after President Donald Trump threatened to implement the tariff increase in a post on Twitter on Sunday, claiming trade talks between the U.S. and China are moving "too slowly."

It is expected that top Chinese negotiator Vice Premier Liu He would lead a delegation coming from Beijing for talks in Washington on Thursday and Friday.

Meanwhile, the Short-term Energy Outlook report from the U.S. Energy Information Administration (EIA) forecasts 2019 U.S. crude production of 12.45 million barrels a day, up 0.5% from the April forecast.

It also raised its 2020 output view by 2.2% to 13.38 million barrels a day.

For 2019, EIA has lifted its West Texas Intermediate crude price outlook by 6.8% to $62.79 a barrel and its Brent view by 6.9% to $69.64.

It also raised the 2020 WTI price view by 8.6% to $63 and Brent price view by 8.1% to $67.

Markets now await the weekly inventory reports from the American Petroleum Institute (API) and Energy Information Administration. While the API is scheduled to release its report later in today, the EIA's data is due Wednesday morning.