Crude prices fell to the lowest level in almost a week as China warned of “serious challenges” to the global economy and the U.S. government shutdown cast a pall over growth.

Futures slid 0.7 percent in New York Wednesday, losing ground for the second day in a row as tensions flared around the world. In Davos, Switzerland, Chinese Vice President Wang Qishan bemoaned the
risks of trade wars and populism while, in Washington, an adviser to President Donald Trump said an extended shutdown could wipe out growth in 2019’s first quarter.

Oil regained some ground after
Venezuela’s opposition party moved to unseat President Nicolas Maduro and as the Trump administration threatened sanctions on the nation’s crude exports. Still, worries about the economy are capping any gains, said Michael Hiley, head of OTC energy trading at LPS Futures in New York. After a
fast start to the year, crude has moved sideways for much of the last two weeks.

“You still have the same old things hanging over us, particularly the question of a trade deal between the U.S. and China,” Hiley said.

Production cuts by OPEC and its allies should eventually lead to a
balanced oil market in 2019, BP Plc Chief Executive Officer Bob Dudley said in an interview from the World Economic Forum in Davos. Still, a sharp slowdown in the world economy led by China
could weigh on crude consumption, International Energy Agency Executive Director Fatih Birol said.

Supplies could be crimped further if Trump follows through with more sanctions against Venezuela, which holds the world’s largest crude reserves as well as OPEC’s rotating presidency this year. The administration expanded its campaign against Maduro on Wednesday, recognizing Venezuelan National Assembly President Juan Guaido as the country’s interim leader.

In the U.S., White House Council of Economic Advisers Chairman
Kevin Hassett said that if the partial government shutdown lasts through March, there’s a chance of zero economic expansion this quarter, though “humongous” growth would follow once federal agencies reopen.

West Texas Intermediate crude for March delivery fell 39 cents to $52.62 a barrel on the New York Mercantile Exchange, reaching the lowest closing price since Jan. 17.

Brent for March settlement fell 36 cents to $61.14 on the London-based ICE Futures Europe exchange after shedding 2 percent on Tuesday. The global benchmark crude was at an $8.52 premium to WTI.

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Global oil demand remains on course to expand “above or around” 1 million barrels a day, but the economic outlook remains unclear, especially in China, Birol said in a Bloomberg television interview from Davos. Oil executives at the forum took a similar view.

“There’s still so much uncertainty about what’s going to happen with the world economy,” Occidental Petroleum Corp. CEO Vicki Hollub said in a panel discussion. “The volatility I think is going to be worse over the next couple of months” before Brent crude settles in a $60- to $70-a-barrel range, she said.

Other oil-market news:

Gasoline futures lost 1.1 percent to $1.3857 a barrel in New York.  Pierre Andurand, one of the oil market’s last hedge fund managers, lost 20 percent in 2018 in his fund’s first annual decline since its inception five years ago. In their quest to make one of the most expensive methods of producing crude more profitable,  Canada’s oil-sands companies are ramping up efforts to get their bitumen to flow through pipelines more easily.

— With assistance by Tsuyoshi Inajima, and Sharon Cho