Oil prices pulled back on Friday, retracing some of the gains of a three rally on Friday, as downbeat economic growth forecasts revived concerns over the outlook for fuel demand. Brent crude was down 18 cents, or 0.3%, at $61.49 by 0642 GMT. Having risen nearly 1% on Thursday, the global benchmark was still set for a weekly gain of more than 3%.
West Texas Intermediate (WTI) crude was down 21 cents, or 0.4%, at $56.02. The U.S. benchmark rose 0.5% in the previous session and was on track for a gain of more than 4% over the week.
The strong weekly rise was underpinned by a surprise decline in U.S. inventories of crude and optimism about more efforts to support prices by OPEC and its allies.
Yet, concerns over weakening economic growth remained the fundamental driver for prices.
“Slowing global activity will see demand drop, so the reality is that oil rallies will be limited,” said Jeffrey Halley, senior market analyst at OANDA. “It won’t take much too pull the rug out from under oil’s feet.”
Economists in a Reuters poll said a steeper decline in global economic growth remains more likely than a synchronised recovery, even as multiple central banks dole out rounds of monetary easing.
Another Reuters poll of economists found the recent truce in the U.S.-China trade war is not an economic turning point and has done nothing to reduce the risk that the United States could slip into recession in the next two years.
“The recent slowdown in U.S. data has resurrected talk of U.S. growth ‘catching down’ to the rest of the world,” said RBC Capital Markets in a note to clients.
There was also more bad news for European powerhouse Germany, with a survey showing employment in the nation’s private sector fell for the first time in six years in October, suggesting that a third-quarter slowdown could stretch into the closing months of the year.
Thursday’s oil price rally was driven by data showing U.S. inventories dropped by 1.7 million barrels last week, shattering analysts’ expectations for an increase of 2.2 million barrels.
Adding further support to prices, Organization of the Petroleum Exporting Countries (OPEC) officials said extended supply curbs are an option to offset the weaker demand outlook in 2020.
Saudi Arabia, OPEC’s de facto leader, wants to focus first on boosting adherence to the group’s production-reduction pact with Russia and other non-members, an alliance known as OPEC+, before committing to more cuts, sources told Reuters.