SINGAPORE: Oil prices dipped on Monday as rising trade tensions and economic woes in emerging markets dented the outlook for fuel demand growth, but US sanctions against Iran still pointed towards tighter supply.
Front-month Brent crude oil futures were at $72.57 per barrel at 0702 GMT, down 24 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were at $67.43 a barrel, down 20 cents, or 0.3 percent from their last settlement.
Traders said the demand outlook for oil was dimming due to ongoing trade disputes between the United States and China, as well as economic trouble in Turkey potentially spreading across emerging markets.
"Trade protectionism and escalating tensions between the world's largest economies (the United States and China) have cast a looming shadow on global oil demand growth in 2018," Singapore-based brokerage Phillip Futures said on Monday.
Hedge funds and other money managers reduced their bullish positions in US crude futures and options in the week ending on Aug. 7, data from the US Commodity Futures Trading Commission showed on Friday.
In broader markets, the concerns about Turkey's financial stability stoking fears of contagion among other emerging markets, especially in Asia, pulled down stocks.
Beyond the darkening economic outlook, Phillip Futures said hedge funds had reduced bullish bets on oil because of "rising production levels from OPEC and the United States."
US energy companies last week added the most oil rigs since May, adding 10 rigs to bring the total count to 869, according to the Baker Hughes energy services firm.
That was the highest level of drilling activity since March 2015.
Despite the cautious mood in oil markets, there were drivers keeping prices from falling further.
The United States has started implementing new sanctions against Iran, which from November will also target the country's petroleum sector.
Iran is the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC).
"With US sanctions on Iran back in place ... maintaining global supply might be very challenging," ANZ bank said on Monday, although it added that "the US is doing its bit to increase production".
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