Brent crude futures LCOc1 were down $2.17, or 3.7%, at $56.77 a barrel by 9:44 a.m. CDT (1444 GMT), setting a fresh seven-month low.
Oil futures jumped more than $1 a barrel on Thursday, recovering half of the almost 5% losses in the previous session, on expectations that lower prices may lead to production cuts, reports Trend referring to Reuters.
"The market is anxious about the broader trade war escalation, Donald Trump and his Twitter finger and indications sliding demand growth will impact the global economy", said Michael Tran, commodity strategist at RBC Capital Markets.
Both crude contracts fell to their lowest mark since January on Wednesday after the U.S. Energy Information Administration said U.S. crude stockpiles rose last week after roughly two months of decline, as imports hit their highest volume since January.
Global financial markets have been rocked over the previous week after U.S. President Donald Trump stated he would impose 10% tariffs on extra Chinese items starting September and as a fall within the Chinese yuan sparked fears of a currency war. Weak demand in established markets is spurring the company to focus on emerging economies, he said. There will also be modest cuts to Asian buyers.
An oil worker removes a thread cap from a piece of drill pipe on a drilling lease owned by Elevation Resources near Midland, Texas, U.S., February 12, 2019. His comments failed to prevent shares in Asia from falling for an eighth straight session while London's FTSE 100 .FTSE gained 0.4%. "Worries about the worsening trade war is still keeping the oil market in a stranglehold", noted Commerzbank analyst Carsen Fitsch.More news: SoulCycle and Equinox facing boycott calls over owner’s planned Trump fundraiser
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The 2019 budget, which was signed by President Muhammadu Buhari in May, was based on oil production of 2.3 million bpd (including condensates) with an oil benchmark price of $60 per barrel.
"Oil prices have clawed back some losses, but the sentiment remains overly bearish", Stephen Innes, managing partner at VM Markets, said in a note.
Tensions in the Middle East remained high after Iran seized a number of tankers in recent weeks in the Strait of Hormuz, a major chokepoint for oil shipments.
USA crude could fall to around the low-$40 a barrel range unless bearish sentiment changes, but US oil production is still surging and the stock market is signaling rising fears of an economic downturn, said Josh Graves, senior market strategist at RJO Futures in Chicago.
Saudi Energy Minister Khalid al-Falih insisted at OPEC's last meeting in July that the kingdom had already cut "deep enough".