Oil Prices Sink on Oversupply Worries

Oil prices continued their decline on Tuesday morning in Asia as traders struggled with concerns about oversupply despite increasing tensions between the United States and Iran. Brent crude slumped 0.31 percent to $72.83 per barrel as of 9:58 a.m. HK/SIN. U.S. WTI futures were down 0.22 percent, trading at $67.74 per barrel.

Oil prices traded higher briefly during the New York trading session on Monday, but then reversed to trade 0.5 percent lower. Uncertainty about global oil supply is driving the markets and keeping prices from surging higher. On Sunday, U.S. President Donald Trump tweeted a message to Iranian leader Hassan Rouhani, warning of significant consequences if Iran continues to threaten the U.S. Trump tweeted: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.

Saudi Arabia and other big oil producers are increasing output to offset the losses expected when the U.S. sanctions on Iran come into effect, sending prices lower.

Stock markets opened higher on Tuesday, boosted by gains on Wall Street for the S&P 500 and the NASDAQ on Monday. The indexes were buoyed by gains in the financial and technology sectors. On Monday, Google parent Alphabet reported better-than-expected earnings, sending tech shares higher, while rising interest rates boosted bank stocks.

The Nikkei 225 was up 0.44 percent in the early morning in Asia, and Hong Kong’s Hang Seng Index was up 1.07 percent. Australia’s ASX saw a 0.58 percent gain and South Korea’s Kospi was up 0.20 percent. The Shanghai Composite enjoyed the steepest gains of the morning, trading 1.42 percent higher.

The global gains kept coming despite lingering concerns over global trade. At the weekend’s G20 summit in Buenos Aires, global financial leaders were unable to conclude with actionable steps towards resolving the global trade tensions.