Brent oil prices fall on US supply but Opec cuts offer support

London — Brent crude fell on Friday, weighed down by surging US supply and concerns of a global economic slowdown, but falling oil cartel Opec supplies put a floor under prices.

International Brent crude futures were at $66.08 a barrel at 10.37am GMT, down 23c from Thursday’s settlement. US West Texas Intermediate (WTI) crude oil futures were at $57.24 a barrel, up 2c.

The US Energy Department said on Thursday that it is offering up to 6-million barrels of crude from national emergency reserves to raise funds to modernise US strategic oil reserves.

On Thursday, Canada’s main oil-producing province of Alberta raised the amount of crude that companies can produce in April to 3.66-million barrels per day (bpd), an increase of 100,000 bpd from the limit imposed in January. But these moves were partially offset by reductions elsewhere.

In Venezuela, oil exports have plunged by 40% to about 920,000 bpd since the US government slapped sanctions on its petroleum industry on January 28. The drop comes as Opec, of which Venezuela is a founding member, leads efforts to withhold about 1.2-million bpd of supply to prop up prices. Venezuela is exempt from the cuts.

“Opec and its 10 allies are doing their job and this time they are stubborn,” London-based brokerage PVM said in a note, referring to the supply restrictions that have been in place since the start of the year.

On the demand side, a Reuters poll showed analysts expect global fuel demand to slow this year amid a broad economic slowdown.

China’s February factory activity fell for a third month as the world’s second-largest economy continued to struggle with weak export orders, a private survey showed on Friday. The weakness is also being felt across the wider region. South Korea’s exports contracted at their steepest pace in nearly three years in February as demand from China cooled further.

Despite this, fuel consumption, especially in Asia’s developing economies ,which are key drivers of global oil demand, is, so far, holding up. India’s diesel consumption, for example, is expected to rise to a record this year amid economic growth of about 7%.

Reuters