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Oil climbs but heads for weekly drop over demand jitters

Oil climbs but heads for weekly drop over demand jitters

Mubasher: Oil prices were higher on Friday, but were heading for big weekly losses amid worries that global economic growth slowdown could dampen fuel demand, according to Reuters.

By 7:53 am GMT, US Nymex crude futures climbed by 0.82% to $52.88 per barrel (pb), while global benchmark Brent futures rose by 0.76% to $58.15 pb.

However, Nymex fell by 6% for the week, the biggest recorded loss since last July, while Brent was down by 6.6%, the largest weekly drop since December last year.

Fears of global oil demand weakness were further fanned by dismal reports on US services sector and job growth, exacerbating worries that a prolonged US-China trade conflict could throw the world’s economy into recession.

“Today in Asia I believe we are seeing some pre-weekend buying, mostly as a risk hedge against anything happening in the Middle East over the weekend,” Singapore-based OANDA senior market analyst Jeffrey Halley was quoted by Reuters.

On the supply front, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman announced the full resumption of oil production after the mid-September attacks on its crude processing installations, which slashed 5% of global supply.

This “faster-than-expected” return of production “will continue to weigh on oil,” Halley said.

Recent data showing a slowdown in US shale production as well as drilling activity could give oil markets some support.

“Continued falls in drilling activity has seen monthly growth in US shale oil output fall, from 150 thousand barrels per day [kbpd] to only 50 kbpd,” ANZ Bank was quoted by Reuters.