Oil market creeps higher after choppy week

25th September 2015, Comments 0 comments

Global oil prices held firm on Friday at the end of a volatile week that has been marked by jitters over Chinese demand and US supplies.

US benchmark West Texas Intermediate for delivery in November rose 33 cents to $45.24 a barrel compared with Thursday's close.

Brent North Sea crude for November delivery added 12 cents to stand at $48.29 a barrel around midday in London.

Prices had rebounded on Monday from the previous week's losses that were sparked by worries over the uncertain demand outlook in China and the United States.

However, crude futures then sank on Tuesday, hit by resurgent concerns about global oversupply and slowing Chinese economic growth.

Weaker growth in energy-hungry China this year is expected to cause a slowdown in the rest of Asia, the Asian Development Bank said Tuesday as it became the latest major body to revise down its forecasts for the world's number two economy.

The ADB tipped China -- the main driver of global economic growth and the top world energy consumer -- to expand 6.8 percent this year, instead of the 7.2 previously estimated, following a stream of weak indicators including on trade, inflation, investment and consumer spending.

It also warned central banks to prepare for an expected US Federal Reserve interest rate rise, with many nations already seeing huge capital outflows as dealers look for safer US investments.

Crude futures took another knock on Wednesday after a key measure of manufacturing in China fell to its lowest level in more than six years, signalling weaker demand in the world's top energy consumer.

The closely watched PMI for Chinese factory activity came in at 47 in September, down from August and the lowest since March 2009.

A result below 50 indicates the manufacturing sector is contracting, while anything above shows expansion.

"Logic states that markets ought to have become used to poor Chinese economic data by now," added analysts at brokers PVM.

"Well, logic does not always prevail and this was seen yet again following fresh evidence of a slowdown in the world's second-biggest economy."

Concerns about a slowdown in the global economy, particularly in key energy consumer China, combined with an oversupply have seen oil prices fall more than 60 percent from last year's peaks above $100 a barrel.

The market also sank Wednesday after the US government's Department of Energy reported that American oil production rose last week by 19,000 barrels per day to 9.136 million, snapping a six-week run of lower production.

That overshadowed figures showing US commercial crude inventories sank 1.9 million barrels in the week ending September 18. Market expectations had been for a lighter drop of 1.25 million.

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© 2015 AFP

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