Oil markets dipped on Friday, dragged down by concerns over a global economic slowdown although supply cuts led by producer club OPEC and U.S. sanctions against Venezuela provided crude with some support.
U.S. West Texas Intermediate (WTI) crude futures were at $52.47 per barrel down 17 cents, or 0.3 per cent from their last settlement. WTI dropped by around 2.5 per cent the previous session.
International Brent crude oil futures were down by 12 cents, or 0.2 per cent at $61.51 per barrel after falling 1.7 per cent the previous session.
Weighing on financial markets, including crude oil futures, were concerns that trade disputes between the United States and China would remain unresolved, denting global economic growth prospects.
U.S. President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal.
If there is no agreement between the world’s two biggest economies, Trump has threatened to increase U.S. tariffs on Chinese imports. Another round of talks is scheduled for next week in Beijing.
“Crude prices returned to the lows of the week as slower growth prospects…could signal a return (of reasons) for inventories to rise,” said Edward Moya, market analyst at futures brokerage Oanda.
Despite this, traders said crude prices were prevented from falling much further by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), which were introduced late last year and are aimed at tightening the market and propping up prices.
As part of these cuts, Saudi Arabia – the world’s biggest crude oil exporter and de-facto leader of OPEC – cut its crude output in January by about 400,000 barrels per day (bpd) to 10.24 million bpd, according to OPEC sources.
That puts Saudi crude oil production almost 1.7 million bpd below that of the United States, which has been churning out around 11.9 million bpd in late 2018 and early 2019 – up by more than 2 million bpd from a year earlier.
Another risk to oil supply comes from Venezuela after the implementation of U.S. sanctions against the OPEC-member’s petroleum industry in late January. Analysts expect this move to knock out 300,000-500,000 bpd of exports.
Yet for the time being, the sanctions impact on international oil markets was limited.
“The (Venezuela) disruption overall seems manageable both for the U.S. and the global market,” said Norbert Rucker, head of commodity research at Swiss bank Julius Baer. “The oil market sits on a comfortable cushion of supply.”