Oil prices dipped on Friday, with US crude heading for a seventh weekly decline amid increasing concerns about slowing global economic growth that could hit demand for petroleum products as inventories build.
Brent is heading for a two per cent decline this week, a third consecutive weekly drop.
West Texas Intermediate, light crude oil is on track for a seventh week of losses, with a fall of more than three per cent.
Traders said the main drags on prices were the darkening economic outlook due to trade tensions between the US and China, and weakening currencies in emerging economies that are weighing on growth and fuel consumption.
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US investment bank Jefferies said on Friday there was an emerging “lack of demand” for crude oil and refined products.
Singaporean bank said on Friday that Chinese data showed a “steady decline in activities” and that “the economy is facing added headwinds due to rising trade tensions with the US.”
Also, just as demand seems to be slowing, supply may be rising, increasing the drag on markets.
“Investors remain cautious as Wednesday’s surprise gain in US stockpiles remained fresh in their minds,” the bank said on Friday.
A weekly report on US drilling activity is due to be published later on Friday by energy services firm Baker Hughes.
In spite of these bearish factors, analysts said prices were prevented from falling further because of US sanctions against Iran, which target the financial sector from August and will include petroleum exports from November.
“Iranian crude exports were still near two million barrels per day in July and will likely begin to fall dramatically in August with financial sanctions taking effect. With oil export sanctions now three months out, we expect exports to fall by more than 500,000 bpd by the end of 3Q,” Jefferies said.
“We maintain our view that Brent prices will exceed $80/bbl before the end of the year,” he said.