Crude oil prices fall 1% on fears for global economy
However, ongoing tensions in the Middle East offered some support
Crude oil prices fell on Friday as concerns over the outlook for global economic growth outweighed elevated tensions in the Middle East that could disrupt supply routes and send prices higher.
US West Texas Intermediate (WTI) crude futures were down 1.1 per cent at $56.72 per barrel this morning. WTI is a grade of crude oil that is used as a benchmark in oil pricing.
Analysts said oil was under pressure because fears over future demand amid trade disputes threatening global economic growth. However, losses were checked by commitment to cut production from the world's largest exporters - including Opec members and other producers such as Russia - a grouping known as Opec+.
Opec+, the alliance headed by Saudi Arabia and Russia that is undertaking crude production cuts since January, has formally agreed to extend output restrictions until March.
"Global growth remains the main factor holding back crude prices," said Alfonso Esparza, senior market analyst at US-based OANDA, which provides currency solutions to corporate clients.
"The Opec+ deal will keep prices from falling too hard, but there must be an end to trade protectionism to assure the demand for energy products recovers."
Oil has gained about 15 per cent since mid-June as tensions escalated in the Middle East and on signs of progress in resolving the US-China trade war. Market watchers including the International Energy Agency have revised down forecasts for demand amid sluggish growth in China and India.
Additionally, new orders for US factory goods fell for a second straight month in May, government data showed on Wednesday, stoking economic concerns.
The US Energy Information Administration on Wednesday reported a weekly decline of 1.1 million barrels in crude stocks, much smaller than the 5 million barrel draw reported by the American Petroleum Institute earlier in the week.
That suggests oil demand in the US, the world's biggest crude consumer, could be slowing amid signs of a weakening economy.
Countering the downward pressure, ongoing tensions in the Middle East also offered some support.
British Royal Marines seized a giant Iranian oil tanker in Gibraltar on Thursday for trying to take oil to Syria in violation of EU sanctions, a dramatic step that drew Tehran's fury and could escalate its confrontation with the West.
Updated: July 5, 2019 09:24 AM