Oil prices dipped on Friday amid concerns over slowing economic growth in China and as investors cashed in on gains of over 2 percent from the previous session, although supply cuts agreed last week by major crude producers offered some support.
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International benchmark Brent crude oil futures were at $60.99 per barrel at 0630 GMT, down 46 cents, or 0.8 percent, from their last close. Brent is set for a decline of around 1 percent this week
China, the world’s No.2 economy and the largest crude importer, on Friday reported some of its slowest growth in retail sales and industrial output in years, highlighting the risks of the country’s trade dispute with the United States.
Chinese November oil refinery throughput fell from October, which was the second-highest month on record, suggesting an easing in oil demand, though runs were 2.9 percent higher than a year earlier.
“For the time being until the OPEC cuts start kicking in, the market is oversupplied in the short-term,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.
“If China is slowing down that’s definitely a concern, but the bright side is demand still remains relatively decent.”
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U.S. West Texas Intermediate (WTI) crude futures were at $52.28 per barrel, down 30 cents, or 0.6 percent, from their settlement.
WTI’s current range suggests a buildup in market momentum, said Michael McCarthy, chief markets strategist at CMC markets.
“For WTI, a move down to $50 or a move up to $54 would give us a direction for the coming period. I’m biased towards the upside because of the shifts we’re seeing in both supply and demand scenarios.”
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Supporting prices, the International Energy Agency said on Thursday that it expected a deficit in oil supply to materialize by the second quarter of next year, provided OPEC members and other key producers stick to last week’s deal to cut output.
As part of the agreement, de facto OPEC leader Saudi Arabia plans to reduce its output to 10.2 million barrels per day (bpd) in January.
The Paris-based IEA kept its 2019 forecast for global oil demand growth at 1.4 million bpd, unchanged from its projection last month, and said it expected growth of 1.3 million bpd this year.
“Crude oil markets should remain relatively tight next year, as OPEC and Russia continue to manage their output. This should mitigate weakness in demand as economic growth trends lower, despite signs of easing trade tension,” said ANZ analyst Daniel Hynes.
(Reporting by Koustav Samanta in Singapore; Editing by Joseph Radford and Christian Schmollinger)
