Mubasher: Oil prices declined earlier on Friday as figures showing the weakest economic growth of China since almost three decades, the world’s second biggest crude consumer, raised worries over demand, according to Reuters.
By 6:46 am GMT, US Nymex crude futures declined by 0.1% to $53.89 per barrel (pb), while global benchmark Brent futures fell by 0.4% to $59.70 pb.
However, by 8:43 am GMT, prices were recovering, with Nymex futures climbing by around 0.6% to $54.23 pb, and Brent rising by nearly 0.3% to $60.07.
China’s gross domestic product (GDP) in the third quarter of this year lost pace to 6% year-on-year, its weakest level since 1992, amid ongoing trade tensions with the US and soft domestic demand.
“The GDP print has weighed on short-term sentiment and we have seen regional stock markets and oil contracts edge lower because of that,” brokerage OANDA Asia Pacific senior market analyst Jeffrey Halley was quoted by Reuters.
That said, China’s demand for oil would not recede any time soon, Halley said.
US Treasury Secretary Steven Mnuchin on Wednesday said that Washington and Beijing were working on sealing a “phase one” trade deal text to be submitted for President Donald Trump and his Chinese counterpart Xi Jinping.
On the supply front, oil prices were dragged down as US oil inventories climbed last week by 9.3 million barrels as refinery output hit two-year trough, while gasoline and distillate fuel stockpiles fell, the US Energy Information Administration (EIA) said on Thursday.
In addition, a joint technical committee monitoring the previously agreed supply cuts among the members of the Organization of the Petroleum Exporting Countries (OPEC) and non-affiliated producers, including Russia, found out that compliance with the output cutting deal was at 236% during September, four sources at the producer group told Reuters.
“Concerns about softer growth in the demand for oil and doubts about OPEC’s ability to rebalance the market on the current production cut rate will be key drags on prices in the near term,” a note by ANZ Research was quoted by the news agency.
