An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, the US. Picture: REUTERS/RICK WILKING
An oil well pump jack is seen at an oil field supply yard near Denver, Colorado, the US. Picture: REUTERS/RICK WILKING

Singapore — Oil markets on Friday remained weak as rising supply and concerns of an economic slowdown pressured prices, with US crude now down by about 20% since early October.

US West Texas Intermediate (WTI) crude oil futures were at $65.60 a barrel at 5.09am GMT, down 4c, or 0.1% from their last settlement. WTI is set to fall for a fifth week, down 4.1% so far this week.

Front-month Brent crude oil futures were at $70.69 a barrel, 4c above their last close. Brent is set for a 2.9% drop for the week, its fifth consecutive week of declines.

Both Brent and WTI have declined by about 20% from the four-year highs they reached in early October.

“Oil prices continue to decline and are now officially in a bear market, having declined 20% from their [October] peak,” said William O'Loughlin, investment analyst at Australia’s Rivkin Securities.

Reuters technical commodity analyst Wang Tao said on Friday that “Brent oil may slide further into a range of $68.59-$69.69 per barrel”.

That would be the first time Brent has fallen below $70 since April.

Analysts said the main downward price pressure came from rising supply, despite the US sanctions against Iran that were imposed this week, as well as concerns over an economic slowdown.

“As Opec exports continue to rise, inventories continue to build which is putting downward pressure on oil prices,” analysts at Bernstein Energy said.

“A slowdown in the global economy remains the key downside risk to oil,” Bernstein said.

The decline in prices over the past weeks follows a rally between August and October when crude rose ahead of the re-introduction of sanctions against Iran’s oil exports on November 5.

The sanctions, however, are unlikely to cut as much oil out of the market as initially expected as Washington has granted exemptions to Iran’s biggest buyers which will allow them to continue buying limited amounts of crude for at least another six months.

China National Petroleum Corp (CNPC) said on Friday it was continuing to take oil from Iranian oilfields in which it has ownership stakes.

“Our main co-operation with Iran is upstream investment. Lifting equity oil is recouping our investment there,” Hou Qijun, deputy general manager for CNPC, said on the sidelines of an industry event in Shanghai.

Bernstein Energy expects “Iranian exports will average 1.4-million to 1.5-million barrels a day during the exemption period”, down from a peak of almost 3-million barrels a day in mid-2018.