LONDON - Oil prices fell on Friday and were heading for a weekly loss on a faster than expected recovery in Saudi output while slowing Chinese economic growth dampens the demand outlook.
Brent crude LCOc1 fell 94 cents to $61.80 a barrel by 1351 GMT while U.S. crude CLc1 slipped by 61 cents to $55.80. Both were down almost 4% over the week, representing WTI’s biggest weekly loss in 10 weeks and Brent’s biggest in seven.
Brent and WTI were also hit by a Wall Street Journal report citing unnamed sources saying that Saudi Arabia had agreed a partial ceasefire in Yemen, said several analyst.
The benchmarks also fell after Iranian President Hassan Rouhani said the United States offered to remove all sanctions on Iran in exchange for talks. However, those losses retraced after U.S. President Donald Trump denied any such offer had been made.
Brent is just above its level before attacks on Saudi facilities on Sept. 14, which initially halved the kingdom’s production.
Sources said this week that Saudi Arabia had restored capacity to 11.3 million barrels per day. Saudi Aramco has yet to confirm it is fully back online.
“The risk premium is deflating further,” said Saxo Bank’s Ole Hansen.
The International Energy Agency (IEA) said on Friday that it might cut its estimates for global oil demand for 2019 and 2020 should the global economy weaken further.
“If the global economy weakens, for which there are already some signs, we may lower oil demand expectations,” said IEA Executive Director Fatih Birol.
In China, the world’s second-largest economy and biggest importer of crude oil, industrial companies reported a contraction in profits in August.
A surprise 2.4 million-barrel build in U.S. crude inventories last week also weighed on prices.
Key oil freight rates from the Middle East to Asia rocketed as much as 28% on Friday in the global oil shipping market, spooked by U.S. sanctions on units of China’s COSCO for alleged involvement in ferrying crude out of Iran.
The COSCO vessels account for about 7.5% of the world’s fleet of supertankers, Refinitiv data showed.
Emerging details connected to the impeachment inquiry into U.S. President Donald Trump also helped to dent demand sentiment, analysts said.
