An oil well is seen near Denver, Colorado. Picture: REUTERS
An oil well is seen near Denver, Colorado. Picture: REUTERS

Singapore — Oil prices jumped more than 1% on Friday amid Organisation of the Petroleum Exporting Countries (Opec) supply cuts and Middle East tensions, but still did not fully recoup losses earlier in the week on economic slowdown jitters and swelling inventories, their steepest drops since the start of 2019.

Brent crude futures, the international benchmark for oil prices, were at $68.50 per barrel at 2.31am GMT, up 74c, or 1.1%, from their last close.

US West Texas Intermediate (WTI) crude futures were up 63c, or 1.1%, at $58.54 per barrel.

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“Multiple supply risks remain, as tension continues between Iran and the US, which could turn disruptive,” ANZ bank said on Friday.

Opec has led supply cuts since the start of 2019 aimed at tightening the market and propping up prices.

ANZ said US sanctions on Iran’s and Venezuela’s oil industries would likely further reduce crude exports from Opec, of which both countries are members.

But Friday’s firmer prices could not make up the much bigger slumps from earlier in the week, which have put crude futures on track for their biggest weekly losses this year.

From mid-week, rising oil inventories in the US started weighing on prices.

“Increasing [oil] inventories and slumping US manufacturing activity exacerbated trade related concerns about global demand,” Michael McCarthy, chief market strategist at CMC Markets in Australia, said in a note, pulling WTI below $60 per barrel and Brent below $70 per barrel.

Asian refinery margins

And the glut has spread beyond North America. Struggling to cope with oversupply from fuels, Asian refinery margins this week fell to their lowest seasonal levels since the financial crisis a decade ago, triggering plans for refinery run cuts.

“In China, petrol stockpiles at seaports were seen rising to a multi-year high, this can shrink the margins for refiners and lead to softer oil demand from China,” ANZ bank said on Friday.

“Oil remains acutely vulnerable to any trade headlines, and with Asian currencies and stocks most likely to be dragged lower, any rallies may be short-lived,” said Jeffrey Halley, senior analyst at futures brokerage Oanda.

Asian shares were hobbled near four-month lows on Friday on worries the US-China trade spat was developing into a more entrenched strategic dispute between the world’s two largest economies.