Oil climbs but still set for big weekly loss over demand worries

CNBC

Reuters
KEY POINTS
  • Brent crude oil futures rose 28 cents, or 0.5%, to $57.99 a barrel by 0450 GMT.
  • U.S. West Texas Intermediate (WTI) crude futures rose 29 cents, or 0.6%, to $52.74.
GP: Tullow Oil 190812 EU
The Tullow Oil Plc Prof. John Evans Atta Mills Floating Production Storage and Offloading vessel sits docked in Singapore on Jan. 21, 2016.
Nicky Loh | Bloomberg | Getty Images

Oil futures were higher ahead of the weekend but remained on track for large weekly losses on fears that slower global economic growth will hurt fuel demand, even as Saudi Arabia said it has fully restored oil output after recent attacks.

Brent crude oil futures rose 28 cents, or 0.5%, to $57.99 a barrel by 0450 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose 29 cents, or 0.6%, to $52.74.

“Asia will probably see some buying emerge over the session as traders hedge potential weekend geopolitical risk, although the session should be quiet with China still on holiday,” said Jeffrey Halley, a senior market analyst at OANDA in Singapore.

For the week, Brent futures were down 6.3%, marking its largest weekly loss since July. WTI was down 5.7% for the week, also its biggest decline since July.

“The recovery from the initial sell-off looked more a case of hope rather than reality,” said Halley.

Weak U.S. services sector and jobs growth data on Thursday added to worries about global oil demand and exacerbated fears that a protracted U.S.-China trade war could push the global economy into a recession.

“Concerns about global oil demand are rising, and next week’s U.S.-China trade talks, the significant X factor, will be particularly important, given the sharp drop in the oil price over the last week,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, also said on Thursday the world’s top crude oil exporter has fully restored oil output after attacks on its facilities last month knocked out more than 5% of global oil supply.

“The mood wasn’t helped by news that Saudi Arabia has managed a speedy recovery from the recent attacks,” ANZ Bank said in a note on Friday.

Recent data showing a slowdown in U.S. shale output and drilling activity, however, could lend some support.

“Continued falls in drilling activity has seen monthly growth in U.S. shale oil output fall, from 150 thousand barrels per day (kbpd) to only 50 kbpd,” said ANZ.

“This is likely to linger well into 2020.”