LONDON- Global benchmark Brent crude oil hit a three-month low on Tuesday as worries over supply disruptions eased and the focus moved to increasing production and potential damage to global growth from the U.S.-China trade dispute.
Benchmark Brent crude oil fell 49 cents to an intraday low of $71.35 a barrel, its lowest since April 17, before recovering to around $71.74, down 10 cents, by 1330 GMT. Brent fell 4.6 percent on Monday.
"The perception in the oil market seems to be shifting," Carsten Menke, commodity research analyst at Swiss private bank Julius Baer, said.
"Fears of shortages, which pushed prices as high as $80 per barrel in early summer, are receding and concerns about looming surpluses growing."
Oil prices have fallen by almost 10 percent over the last week as crude export terminals in Libya have reopened and exports from other OPEC countries and Russia have improved.
Also undermining prices is concern the growing trade war between the United States and other major trading blocs, particularly, China, could dampen economic activity and hence squeeze oil demand.
China this week reported slightly slower growth for the second quarter and the weakest expansion in factory activity in June in two years, suggesting a further softening in business conditions in coming months as trade pressures build.
Beijing's state planning agency said on Tuesday it was still confident of hitting its economic growth target of around 6.5 percent this year, despite views that it faces a bumpy second-half as the trade row with Washington intensifies.
Goldman Sachs on Monday said it expects price volatility in oil markets to remain elevated, keeping Brent crude in a $70 to $80 per barrel range in the short term.
"Supply shifts, alongside the ongoing surge in Saudi production, create the risk that the oil market moves into surplus" in the third quarter, the report said.
U.S. oil supply is continuing to rise.
Output from seven major shale formations is expected to rise by 143,000 bpd to a record 7.47 million bpd in August, the U.S. Energy Information Administration said on Monday.
Production is expected to rise in all seven formations. All shale regions except for Appalachia are at a high.
But supply disruptions continue elsewhere.
While Libyan ports are reopening, output at its Sharara oilfield was expected to fall by at least 160,000 barrels per day (bpd) after two workers were abducted by an unknown group, the National Oil Corporation said.
(Reporting by Aaron Sheldrick in Tokyo and Christopher Johnson in London; editing by Jason Neely) ((firstname.lastname@example.org; +44 7790 561 651; Reuters Messaging: email@example.com))