Mubasher: Oil prices fell on Friday amid worries about the slowdown in Chinese economic growth and as traders saw gains of over 2% from the last session.
However, supply curbs announced last week by top oil producers offered some support for prices.
By 7:56 am GMT, international benchmark Brent futures fell 0.67% to $61.04 per barrel (pb), while US Nymex crude futures declined 0.51% to $52.31 pb.
China, the world’s largest oil consumer, reported on Friday some of its slowest growth in retail sales and industrial production since years, signalling risks of the country’s trade conflict with the US.
Oil refinery throughput in China dipped month-on-month last November, indicating that oil demand waned, despite runs rose 2.9% year-on-year.
Currently, the market is over-supplied in the short term, until the supply cuts agreed by the members of the Organization of Petroleum Exporting Countries (OPEC) and allied producers start to take effect, Tokyo-based Mitsubishi oil risk manager Tony Nunan told Thomson Reuters.
“If China is slowing down that’s definitely a concern, but the bright side is demand still remains relatively decent,” Nunan said.
The International Energy Agency (IEA) on Thursday left its projection for global oil demand growth in the next year at 1.4 million barrels per day (bpd), unchanged from its forecast last month, expecting growth to come in at 1.3 million bpd this year.
Moreover, buoying prices, the IEA predicted a shortage in oil markets to materialise by the second quarter of the next year, if OPEC and non-OPEC producers stick to last week’s deal to reduce production.
The producer group and allied exporters, including Russia agreed last week on cutting supply by 1.2 million bpd, to clear a market glut and support prices.
“Crude oil markets should remain relatively tight next year, as OPEC and Russia continue to manage their output,” Australia and New Zealand (ANZ) bank analyst Daniel Hynes told Reuters, adding that “this should mitigate weakness in demand as economic growth trends lower, despite signs of easing trade tension.”
