Oil slips further from 2019 highs on trade worries

[LONDON] Oil fell further from 2019 highs on Friday as focus shifted to a lack of progress in US-China trade talks, but prices found support from supply cuts led by producer club the Organization of the Petroleum Exporting Countries (Opec) and by US sanctions on Iran and Venezuela.

Brent crude futures were at US$67.11 per barrel at 1204 GMT, 75 US cents below their last close and broadly flat on the week. The contract hit a four-month high of US$68.69 on Thursday.

Benchmark Brent has risen by just under a third since the beginning of January, when Opec started to cut production.

US West Texas Intermediate (WTI) futures were at US$59.40 per barrel, down 58 US cents. WTI marked a 2019 peak in the previous session at US$60.39 and is set for a third consecutive week of gains.

"Oil prices have come under pressure in today's trading session because of profit-taking and uncertainty surrounding the US-China trade talks," said Abhishek Kumar, head of analytics at Interfax Energy in London.

Nevertheless, bullish sentiment is set to prevail in the near term, helped by output cuts by Opec and its allies and sharply falling production from Venezuela and Iran, Mr Kumar said.

As economic growth has slowed across Asia, Europe and North America, potentially denting fuel consumption, no breakthrough has emerged in the trade stand-off between Washington and Beijing, at least before meetings scheduled on March 28-29.

Three in four Japanese companies expect US-China trade frictions to last until at least late this year, a Reuters poll found.

A jump of more than two million barrels per day (bpd) in US crude oil production since early 2018 to a record 12.1 million bpd has made the United States the world's biggest producer, ahead of Russia and Saudi Arabia.

This has resulted in increasing exports, which have doubled over the past year to more than two million bpd. The International Energy Agency estimated that the United States would become a net crude oil exporter by 2021.

US energy firms last week reduced the number of oil rigs operating for a fourth week in a row, with drilling slowing to its lowest in nearly a year, energy services firm Baker Hughes said. Fresh data is due on Friday.

Still, oil prices this year have been propped up by supply cuts by Opec and allies such as Russia.

REUTERS