Singapore: Oil prices fell on Friday after the United States showed signs of following Asia into an economic slowdown, although supply cuts by producer club OPEC kept declines in check. US West Texas Intermediate (WTI) crude oil futures were at $46.71 per barrel at 0117 GMT, down 35 cents, or 0.7 percent, from their last settlement. International Brent crude futures were down 38 cents, or 0.7 percent, at $55.57 a barrel. Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest U.S. slowdown in growth for more than a decade, as the trade conflict with China, falling equity prices and increasing uncertainty started to take a toll on the world’s biggest economy.
Despite this, traders said oil prices are expected to receive some support as supply cuts announced late last year by the Organization of the Petroleum Exporting Countries (OPEC) start to kick in.
OPEC oil supply fell by 460,000 barrels per day (bpd) between November and December, to 32.68 million bpd, a Reuters survey found on Thursday, as top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.
OPEC, Russia and other non-members - an alliance known as OPEC+ - agreed last December to reduce supply by 1.2 million bpd in 2019 versus October 2018 levels. OPEC’s share of that cut is 800,000 bpd.
“If OPEC is faithful to its agreed output cut together with non-OPEC partners, it would take 3-4 months to mop up the excess inventories," energy consultancy FGE said.
Considering the planned cuts versus ongoing increases in U.S. crude production, which hit a record 11.7 million bpd by late 2018, FGE said it expected Brent prices to range between $55-$60 per barrel in the first months of 2019.