Oil extends drop on OPEC+ taper jitters and US-China tension

Oil dropped for a second day on expectations that OPEC+ will start winding down production cuts next month and as escalating tension between Washington and Beijing worsened sentiment across financial markets.

Futures in New York fell toward $39 a barrel after retreating 1.1% on Monday. OPEC+’s Joint Ministerial Monitoring Committee meets Wednesday and the group is expected to stick to its plan of tapering the cuts from August even as the coronavirus rages unabated in many parts of the world, particularly the U.S.

Crude was also caught up in a broad downward move in markets late on Monday after the White House rejected Beijing’s expansive maritime claims in the South China Sea. While the immediate impact wasn’t clear, it was the latest in a series of disputes between the world’s two largest economies that threaten to complicate the global recovery from the pandemic.