Oil futures rose sharply on Friday, making back-to-back gains after slumping into a bear market earlier in the week on growing concerns about the impact Trump’s trade war is having on global economic activity and demand.
The price of the key US marker crude, West Texas Intermediate (WTI), fell more than 20% below its 2019 settlement high of $US66.30 hit on April 23, which is bear-market territory.
The price of the global marker crude, Brent also fell more than 20% from its late-April high-water mark.
But Thursday prices rebounded somewhat and Friday saw more of the same as WTI for September delivery ending up $US1.96, or 3.7%, to settle at $US54.50 a barrel in New York.
WTI 4.7% plunge to $US51.09 Wednesday marked the lowest settlement for the contract since January 14 this year.
That saw WTI end the week with a loss of 2.1%.
October Brent crude rose $1.15, or 2%, to settle at $US58.53 a barrel in Europe. The global benchmark saw a 5.4% slide.
Crude prices held their gains after oil-field services firm Baker Hughes said the number of US oil rigs fell again for another week – down by six to 764.
Friday’s strength came in the face of yet another cut in global demand estimates for 2019 and 2020 from the International Energy Agency (IEA).
With weaker prospects for the global economy noted, the IEA cut its forecast for 2019 demand growth by 100,000 barrels a day to 1.1 million barrels a day, and its 2020 forecast rise was cut by 50,000 barrels a day to 1.3 million barrels a day.
The IEA said new data show cuts to oil demand figures from India, Saudi Arabia, Korea, and several European countries, and preliminary US data show lower demand for motor fuels at the start of peak driving season.
Chinese oil demand was raised by the IEA, despite the problems with the Trump trade war.
“Meanwhile, the prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth,” the IEA said in its monthly report
Looking ahead, the IEA said the outlook for oil demand growth is “fragile,” with a greater likelihood of a downward revision than an upward one.
