Oil prices dipped on Friday amid concerns over slowing economic growth in China and as investors cashed in on gains of over 2 per cent from the previous session, although supply cuts agreed last week by major crude producers offered some support.

Brent crude futures were at $61.08 per barrel at 0530 GMT, down 37 cents, or 0.6 per cent, from their last close. US West Texas Intermediate (WTI) crude futures were at $52.42 per barrel, down 16 cents, or 0.3 per cent, from their settlement.

China, the world's No 2 economy and the largest crude importer, on Friday reported some of its slowest growth in retail sales and industrial output in years, highlighting the risks of the country's trade dispute with the United States.

Chinese November oil refinery throughput fell from October, which was the second-highest month on record, suggesting an easing in oil demand, though runs were 2.9 per cent higher than a year earlier.

“For the time being until the OPEC cuts start kicking in, the market is oversupplied in the short-term,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. “If China is slowing down that's definitely a concern, but the bright side is demand still remains relatively decent.”

Supporting prices, the International Energy Agency said on Thursday that it expected a deficit in oil supply to materialise by the second quarter of next year, provided OPEC members and other key producers stick to a deal agreed last week to cut output.

As part of the agreement, de facto OPEC leader Saudi Arabia plans to reduce its output to 10.2 million barrels per day (bpd) in January. “Crude oil markets should remain relatively tight next year, as OPEC and Russia continue to manage their output. This should mitigate weakness in demand as economic growth trends lower, despite signs of easing trade tension,” said ANZ analyst Daniel Hynes.

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