Oil rose to 81 dollars per barrel on Friday, rebounding after two days of declines, though prices pared gains after another closely watched forecaster deemed supply adequate and the outlook for demand weakening.
Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns that
looming U.S. sanctions on Iran will cut supplies significantly.
A monthly report by the International Energy Agency (IEA) said the oil market looked “adequately supplied for now” after a big rise
in production and trimmed its forecasts for world oil demand growth this year and next.
“This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data,” said the IEA, which
advises industrialized countries on energy policy.
International benchmark Brent crude rose 76 cents to $81.02 a barrel by 0830 GMT, having dropped by 3.4 per cent on Thursday.
U.S. crude added 71 cents to $71.68.
Brent is still on course for a 3.7 per cent decline this week, the biggest weekly fall in about four months.
Oil found support from figures showing that China’s daily crude imports in September hit their highest since May and from a
rebound in equities.
A drop in equities amid wider risk-off investor sentiment had pressured crude on Thursday.
Still, the IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate.
The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.
“The bearish alarm bells are ringing for next year’s oil balance as market players brace for the return of a supply surplus,” said
Stephen Brennock of oil broker PVM.
A drop in U.S. oil production also lent prices some support. In the U.S. Gulf of Mexico, companies cut output by 40 per cent on
Thursday because of Hurricane Michael, even as some operators began returning crews to offshore platforms.
Michael made landfall in Florida on Wednesday as the third most powerful hurricane to strike the U.S. mainland, though it has
since weakened to a tropical storm.