Oil dips as demand concerns counter US-China trade hopes

[NEW YORK] Oil prices edged lower on Friday and posted weekly losses, as concerns about slower global economic growth outweighed hints of progress in the US-China trade dispute.

Brent crude futures fell 16 US cents to settle at US$60.22 a barrel. US West Texas Intermediate (WTI) crude futures delivery fell 24 US cents to end at US$54.85 a barrel.

Brent fell 2.1 per cent for the week, its first decrease in five weeks. WTI lost about 3 per cent loss for the week, its first decrease in three weeks.

The world's two largest economies have been making conciliatory gestures as they prepare for new talks.

China will exempt some US agricultural products from additional tariffs, China's official Xinhua News Agency said.

Oil prices, however, remained under pressure by concern about a weaker demand outlook.

"Oil appears to be suggesting that global economic growth has already been impacted by the tariffs while other markets such as the equities appear more focused on future progress," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Both the Organization of the Petroleum Exporting Countries and the International Energy Agency (IEA) this week said oil markets could end up in surplus next year, despite a pact by Opec and its allies to limit supplies that is largely being offset by growing US production.

US energy firms this week reduced the number of oil rigs operating for a fourth week in a row, cutting five rigs this week and bringing the total down to 733, the lowest since November 2017, General Electric Co's Baker Hughes energy services firm said.

Brent prices have risen about 12 per cent so far in 2019, helped by the deal between Opec and allies, known as Opec+, to cut output by 1.2 million barrels per day.

An Opec+ monitoring committee this week secured pledges from Opec members Nigeria and Iraq to deliver their share of the cut, something they have failed to do so far, but so far the group has not decided to deepen the curbs.

Some Opec delegates say the idea of a larger cut for next year is gaining support, though Saudi Arabia's new energy minister said talks on that issue would be left until the next Opec+ meeting in December.

But "if the US-China trade deal is sealed, they may have to raise production, not cut," said Phil Flynn, an analyst at Price Futures Group in Chicago.

REUTERS