Mubasher: Oil prices declined on Friday as markets were held back by worries over a global economic slowdown.
However, supply curbs led by the Organization of Petroleum Exporting Countries (OPEC) and US sanctions against Venezuela capped the drop of prices.
By 9:02 am GMT, US Nymex crude futures fell 0.42% to $52.42 per barrel (pb), while global benchmark Brent futures declined 0.18% to $61.52 pb.
Weighing on crude market were concerns that the trade conflict between the US and China, the world’s two biggest economies would remain unresolved, choking economic growth prospects.
US President Donald Trump on Thursday said that he did not intend to meet his Chinese counterpart Xi Jinping before 1 March deadline set by both sides to hammer out a trade agreement.
Without a deal, President Trump threatened to raise US tariffs on Chinese imports.
“Crude prices returned to the lows of the week as slower growth prospects [...] could signal a return [of reasons] for inventories to rise,” futures brokerage OANDA market analyst Edward Moya told Thomson Reuters.
That said, a further fall in crude prices was prevented by supply cuts by an OPEC-led producer group, including Russia, which were announced late last year with the aim to tighten the market and shore up prices, traders told Reuters.
In the same vein, Saudi Arabia, OPEC de-facto leader, slashed its oil output last January by around 400,000 barrels per day (bpd) to 10.24 million bpd, Reuters said, citing sources from the producer club.
In addition, the implementation of sanctions against Venezuela’s hydrocarbon industry late January posed another risk to oil supply, with analysts estimating a shortfall from 300,000 to 500,000 bpd in exports.
Nevertheless, the impact of sanctions on international oil markets is limited until now.
“The disruption [from Venezuela] overall seems manageable both for the US and the global market,” Swiss bank Julius Baer commodity research head Norbert Rucker told Reuters, adding that “oil market sits on a comfortable cushion of supply.”
