0627 GMT: Oil prices fell in Asia Monday afternoon on emerging signs of potential US-China trade tensions amid the ongoing coronavirus pandemic.

At 2:27 pm Singapore time (0627 GMT), ICE Brent crude July futures were down 44 cents/b (1.66%) from Friday's settle at $26/b, while the NYMEX June light sweet crude contract was $1.46/b (7.38%) lower at $18.32/b.

"The resumption of the trade war will be detrimental to oil prices over the long term," Axicorp chief global markets strategist said in a note Monday.

The US-China relations have been strained during the coronavirus pandemic, with the US President Donald Trump blaming China for the outbreak. Last week, Trump claimed that China "will do anything they can" to make him lose in the upcoming presidential election in November.

"[The renewed possibility of the return of the trade war] remains to be seen if this may be short-term positioning by the US administration, particularly given the costs both to the US equity market and US consumers should further trade barriers to put up during a time of economic distress," IG market strategist Pan Jingyi said in a note Monday.

On the other hand, oil fundamentals were showing signs of improvement.

Oil production has been on a decline as global producers continue to respond to the supply glut. Energy technology company Baker Hughes' rig count data showed that US oil rigs have dropped by 53 to 325 during the week ended May 1. Meanwhile, OPEC+ oil production cut agreement of 9.7 million b/d also came into effect in May.

In addition, more efforts were taken to further rectify the supply glut. US-based Chevron plans to shut-in around 200,000-300,000 b/d of oil equivalent in May, the producer said during its first-quarter earnings briefing. Separately, ExxonMobil said Friday that it expects to cut global upstream production by 10% or 400,000 boe/d in the second quarter through shut-ins and curtailments.

Demand for products is also likely to gradually improve as economies around the globe reopen with governments easing lockdown restrictions.

The US Energy Information Administration adjusted US gasoline demand up by 15% on the week to 6.5 million b/d for the week ended April 24.

"With the market rebalancing now in motion, traders will also commence positioning for a multi-staged tightening cycle. First led by retail and industrial consumption and to the latter end of the stick, aviation fuel demand, as travel restrictions will likely be at the tail end of the re-opening process," Innes said.