Oil Prices Rise after Heavy Slumps

Crude prices increased 1 percent on Friday, rebounding after two days of heavy slumps with support from robust Chinese crude imports. Read more here!

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Crude prices increased 1 percent on Friday, rebounding after two days of heavy slumps with support from robust Chinese crude imports, but oil was still headed for its first weekly decline in five weeks.

Brent crude futures gained 89 cents, or 1.1 percent, to $81.15 per barrel. The contract fell 3.4 percent on Thursday following sharp falls in equity markets and hints that supply worries have been overblown.

Brent is still heading for a 3.6 percent decline this week, the largest drop in about four months.

US West Texas Intermediate crude futures were higher 75 cents, or 1.1 percent, at $71.72 per barrel, after a 3 percent slump in the previous session. WTI is seen to be on track for a 3.5 percent decline this week.

Asian shares managed a slightly better stance on Friday to set course for its first gains in a couple weeks. However, the rout continued in Shanghai after Wall Street extended its slump into sixth session.

Japan’s Nikkei was down 0.3 percent on Friday.

Meanwhile, on the oil front, China’s daily crude oil imports in September reached their highest level since May, customs day showed on Friday.

US crude inventories gained 6 million barrels last week, the Energy Information Administration stated, more than double the analysts’ expectations of a 2.6 million-barrel increase.

The Organization of the Petroleum Exporting Countries slashed its forecast of global demand growth for oil next year for a third consecutive month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets.

The organization believes the oil market is well supplied and is wary of creating a glut next year, the group’s secretary-general stated on Thursday.

“We still estimate oil demand growing at 1.2 million to 1.5 million barrels per day for this year, and see the risk of a slowdown in 2019 if trade tension escalates,” ANZ Research analysts said.

In the US Gulf of Mexico, producers had slashed output by 40 percent on Thursday due to Hurricane Michael, even as some operators began returning crews to offshore platform.

Michael crashed ashore Florida on Wednesday as the third most powerful hurricane to hit the US mainland. It has since weakened to a tropical storm.

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Elsewhere, gold prices slipped on Friday but hovered near 10-week high after increasing 3 percent during the previous session. It was the biggest one-day gain in more than two years.

 Gold futures for delivery in December shed 0.3 percent  and traded at $1,224.30 on the COMEX division of the New York Mercantile Exchange .

Gold prices recorded its largest daily percentage gain on Thursday since June 2016 as global stock markets extended their losses. Fears of increasing bond yields also drove trades toward safe-haven assets.

On the other hand, analysts expect rising interest rate would potentially remain a worry for gold prices. interest rate increases and higher US bond yields dampen appeal for gold, which offers no yield. They also usually bolster the dollar.

“The sinking of global markets has led people to seek gold as a safe haven. However, in Asian hours today we have seen some profit-taking,” said Peter Fung, who is the head of dealing at Wing Fung Precious Metals in Hong Kong.

“With prices breaking the resistant $1,200 level and also crossing $1,225, it could be a signal that gold market is on the upside. Especially, given the that during November and December we also see increased physical buying,” he added.

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