SINGAPORE (Reuters) – Oil prices jumped more than 1% on Friday amid OPEC supply cuts and Middle East tensions, but still did not fully recoup losses earlier in the week on economic slowdown jitters and swelling inventories – their steepest drops since the start of the year.
FILE PHOTO: An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, July 21, 2014. REUTERS/Todd Korol/File Photo
Brent crude futures, the international benchmark for oil prices, were at $68.50 per barrel at 0231 GMT, up 74 cents, or 1.1%, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 63 cents, or 1.1%, at $58.54 per barrel.
“Multiple supply risks remain, as tension continues between Iran and the U.S., which could turn disruptive,” ANZ bank said on Friday.
The Organization of the Petroleum Exporting Countries (OPEC) has led supply cuts since the start of the year aimed at tightening the market and propping up prices.
ANZ said U.S. sanctions on Iran’s and Venezuela’s oil industries would likely further reduce crude exports from OPEC, of which both countries are members.
But Friday’s firmer prices could not make up the much bigger slumps from earlier in the week, which have put crude futures on track for their biggest weekly losses this year.
From mid-week, rising oil inventories in the United States started weighing on prices.
“Increasing (oil) inventories and slumping U.S. manufacturing activity exacerbated trade related concerns about global demand,” Michael McCarthy, chief market strategist at CMC Markets in Australia, said in a note, pulling WTI below $60 per barrel and Brent below $70 per barrel.
And the glut has spread beyond North America. Struggling to cope with oversupply from fuels, Asian refinery margins this week fell to their lowest seasonal levels since the financial crisis a decade ago, triggering plans for refinery run cuts.
“In China, gasoline stockpiles at seaports were seen rising to a multi-year high, this can shrink the margins for refiners and lead to softer oil demand from China,” ANZ bank said on Friday.
“Oil remains acutely vulnerable to any trade headlines, and with Asian currencies and stocks most likely to be dragged lower, any rallies may be short-lived,” said Jeffrey Halley, senior analyst at futures brokerage OANDA.
Asian shares were hobbled near four-month lows on Friday on worries the U.S.-China trade spat was developing into a more entrenched strategic dispute between the world’s two largest economies.
Reporting by Henning Gloystein; Editing by Joseph Radford and Kenneth Maxwell