Oil prices rose on Friday slightly reversing two days of declines in the previous sessions driven by sharp falls in equity markets and indications that supply concerns have been overblown, but were still on track for a weekly fall.
Brent crude futures rose 33 cents, or 0.4 per cent, to $80.59 a barrel by 0256 GMT. The contract fell 3.4 per cent on Thursday, dropping to as low as $79.80, its weakest since September 24. It is heading for a 4.2 per cent decline this week, the first weekly drop in five.
US West Texas Intermediate (WTI) crude futures were up 26 cents, or 0.4 per cent, at $71.23 a barrel, after falling 3 per cent in the previous session to the lowest since September 21. WTI is on track for a 4.2 per cent decline this week, also the first weekly drop in five.
Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating US trade war with China and risks from a recent climb in interest rates. Japan's Nikkei was down 0.5 per cent on Friday.
On the oil front, US crude inventories rose by 6 million barrels last week, the Energy Information Administration said, more than double analysts' expectations of a 2.6 million-barrel increase.
The Organisation of the Petroleum Exporting Countries (OPEC) cut its forecast of global demand growth for oil next year for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets. It sees the oil market as well supplied and is wary of creating a glut next year, the group's secretary-general said on Thursday.
“We still estimate oil demand growing at 1.2 million to 1.5 million barrels per day for this year, and see the risk of a slowdown in 2019 if trade tension escalates,” ANZ Research analysts said in a report.
In the US Gulf of Mexico, producers had cut output by 40 per cent on Thursday due to Hurricane Michael, according to the Bureau of Safety and Environmental Enforcement, even as some operators began returning crews to offshore platforms. The cuts represent 680,107 barrels per day of oil production, the bureau said, citing reports from 30 companies. Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to strike the US mainland, leaving seven people least. It has since weakened to a tropical storm.