Crude prices bounced back on
Friday from two-month lows hit in the previous session, but benchmark Brent was
in line for its largest weekly decline since January as bearish economic
indicators weighed on oil.
Brent crude futures LCOc1
were trading at $46.58 per barrel at 0933 GMT, up 18 cents from their last
settlement. U.S. crude CLc1 was up 17 cents at $45.31 a barrel.
Still, Brent and U.S. crude
were heading for weekly losses of more than 7 percent, the deepest such
declines since January and February, respectively.
"It could well be that
a down cycle on oil's own fundamentals is now starting," analysts at JBC
said in a note.
Prices fell 5 percent on
Thursday on news that a U.S. weekly crude draw was lower than many analysts had
expected.
Yet on Friday traders said
the price fall had been an overreaction, as crude stocks had dropped for almost
two months straight and U.S. production had fallen 12.3 percent since 2015
peaks.
"Declining U.S.
production is contributing hugely to the tightening of global supply, which is
reduced in any case because of high production outages in OPEC countries,"
Commerzbank analyst Carsten Fritsch said.
Supply losses, particularly
in Nigeria, underpinned prices. On Friday, the Nigeria Security and Civil
Defence Corps said attackers had blown up an oil pipeline in Nigeria's southern
Bayelsa state operated by a subsidiary of Italy's Eni.
Still, the outlook appeared
volatile, as tanks were filled with oil products and economic worries created
concerns over demand growth.
On Friday, data showed that
German exports in May posted their steepest monthly decline in nine months, a
further sign that weak global demand is curbing growth in Europe's largest economy.
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