Oil rose 2 percent on Friday after proposed trade talks between the United States and China eased some fears about a global economic slowdown, but gains were capped after the United States reported a sharp build in refined product inventories.
Brent crude futures
After both benchmarks fell sharply last year, prices were on track for solid gains in the first week of 2019, despite recent data that added to concerns about a slowing global economy.
Brent was set to increase about 9.3 percent for the week, while WTI was on track to rise around 5.7 percent.
Prices pared gains on Friday after data from the U.S. Energy Information Administration showed a sharp increase in product inventories as refiners ramped up utilization rates
U.S. crude stockpiles were little changed.
"The significant build in product inventory has put a damper on the oil price rally we saw earlier this morning," said Andrew Lipow, president of Lipow Oil Associates in Houston.
U.S. energy firms this week cut oil rigs for the first time in three weeks, reducing the rig count
Oil drew support from comments by China`s commerce ministry, which said Beijing would hold vice-ministerial trade talks with U.S. counterparts on Jan. 7-8. The news helped boost sentiment across riskier assets including the U.S. equity and oil markets. [.N]
Washington and Beijing have been locked in a trade war for much of the past year, disrupting the flow of hundreds of billions of dollars worth of goods and hampering growth.
China`s services sector extended its expansion in December, a private survey showed on Friday, bucking a trend of downbeat economic data.
"Recent Chinese data is not confirming the doom-and-gloom trend," said Olivier Jakob, oil analyst at Petromatrix. "And you`ve got OPEC cutting."
A robust U.S. jobs report also added to broader market optimism.
Despite some demand-side worries, oil has received support as supply cuts announced by the global coalition of producers known as OPEC kick in.
The Organization of the Petroleum Exporting Countries, Russia and other non-members agreed in December to reduce supply by 1.2 million barrels per day (bpd) in 2019. OPEC`s share of that cut is 800,000 bpd. A Reuters survey on Thursday found OPEC supply fell by 460,000 bpd in December.
The focus now will be on whether producers deliver further curbs in January to implement the deal fully. Iraq said on Friday it was committed to the deal and would keep its oil production at 4.513 million bpd for the first half of 2019.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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