Oil on Friday clawed back some of its losses from the previous session, when prices fell the most in a month, as concerns about oil supply are countering worries that emerging market crises and trade disputes could dent demand, Reuters reports.
Brent crude was up 8 cents, or 0.1 percent, at $78.26 a barrel by 0338 GMT, after falling 2 percent on Thursday. The global benchmark rose on Wednesday to its highest since May 22 at $80.13.
U.S. West Texas Intermediate (WTI) futures were up 18 cents, or 0.2 percent, at 68.76 a barrel, after dropping 2.5 percent on Thursday.
Brent is heading for a 1.8 percent gain this week, while WTI is on track for a 1.5 percent increase.
“Prices remain well supported as the market continues to fret about ongoing structural supply issues elsewhere,” ANZ Research said in a note.
The International Energy Agency on Thursday warned that although the oil market was tightening at the moment and world oil demand would reach 100 million barrels per day (bpd) in the next three months, global economic risks were mounting.
“As we move into 2019, a possible risk to our forecast lies in some key emerging economies, partly due to currency depreciations versus the U.S. dollar, raising the cost of imported energy,” the agency said.
“In addition, there is a risk to growth from an escalation of trade disputes,” the Paris-based agency said.
China will not buckle to U.S. demands in any trade negotiations, the major state-run China Daily newspaper said in an editorial on Friday, after Chinese officials welcomed an invitation from Washington for a new round of talks.
U.S. President Trump said on Twitter on Thursday that the United States holds the upper hand in talks.
“We are under no pressure to make a deal with China, they are under pressure to make a deal with us,” Trump tweeted.
Still, supply concerns are supported by data showing that U.S. crude production fell by 100,000 bpd to 10.9 million barrels per day last week as the industry faces pipeline capacity constraints.
Though weekly output slipped, the United States likely surpassed Russia and Saudi Arabia earlier this year to become the world’s largest crude oil producer, based on preliminary estimates from the Energy Information Administration.
Although the EIA does not publish crude production forecasts for Russia and Saudi Arabia in its short term outlook, it expects that U.S. output will continue to exceed Russian and Saudi production for the remaining months of 2018 and through 2019.
The loss of Iranian oil to the market as refiners are cutting or halting purchase ahead of U.S. sanctions in November is also raising concerns about supply.