An oil tanker at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER
An oil tanker at sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela. Picture: REUTERS/ALEXANDRA ULMER

Singapore — Oil markets fell on Friday, pulled down by an economic slowdown, although supply cuts led by producer cartel Opec and US sanctions against Venezuela provided crude with some support.

US West Texas Intermediate (WTI) crude futures stood at $52.20 a barrel by 3.51am GMT, down 44c, or 0.8%, from their last settlement. WTI dropped by around 2.5% the previous session.

International Brent crude oil futures were down by 44c, or 0.7%, at $61.19 a barrel, after falling 1.7% the previous session.

Weighing on financial markets, including crude oil futures, were concerns that trade disputes between the US and China would remain unresolved, denting global economic growth prospects.

US President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to strike a trade deal.

If there is no agreement between the world’s two biggest economies, Trump has threatened to increase US tariffs on Chinese imports. Another round of talks is scheduled for next week in Beijing.

“Crude prices returned to the lows of the week as slower growth prospects … could signal a return [of reasons] for inventories to rise,” said Edward Moya, market analyst at futures brokerage Oanda.

On Thursday, the European Commission sharply cut its forecasts for eurozone economic growth as it expects global trade tension and an array of domestic challenges.

The commission said growth this year would slow to 1.3% from 1.9% in 2018, before rebounding in 2020 to 1.6%.

Despite this, traders said crude prices were prevented from falling much further by supply cuts led by Opec, adopted late last year with the aim of tightening the market and propping up prices.

As part of the cuts, Saudi Arabia — the world’s biggest crude exporter — cut its output in January by about 400,000 barrels a day to 10.24-million barrels a day, according to Opec sources.

That puts Saudi crude oil production almost 1.7-million barrels a day below that of the US, which has been churning out about 11.9-million barrels a day in late 2018 and early 2019 — up by more than 2-million barrels a day from a year earlier.

Another risk to supply comes from Venezuela after the implementation of US sanctions against the Opec member’s petroleum industry in late January. Analysts expect this move to knock out 300,000-500,000 barrels a day of exports.

Yet for the time being, the sanctions impact on international oil markets was limited.

“The [Venezuela] disruption overall seems manageable both for the US and the global market,” said Norbert Rücker, head of commodity research at Swiss bank Julius Baer. “The oil market sits on a comfortable cushion of supply.”