Oil price drops 2% on Wall Street losses, weak China data

U.S. West Texas Intermediate crude for October delivery was up 31 cents, or 0.4 percent, at $71.43 a barrel by 0018 GMT, after settling up $1.27. Front-month London Brent crude, for November delivery, was down 2 cents at $79.38, having ended up 37 cents.

NEW YORK: Oil prices dropped about 2 percent on Friday, weighed down by falling U.S. stock markets, while weak economic data from China pointed to lower fuel demand in the world's biggest oil importer.

Brent crude futures fell $1.17 to settle at $60.28 a barrel, a 1.90 percent loss. U.S. West Texas Intermediate (WTI) crude futures lost $1.38 to settle at $51.20 a barrel, a 2.62 percent loss.

Global benchmark Brent posted a weekly loss of almost 2.3 percent, while WTI declined nearly 2.7 percent.

"The oil complex remains vulnerable to heavy selling into the equities especially when combined with a strengthening in the U.S. dollar as is the case so far today," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

U.S. equity markets broadly fell as China's November retail sales grew at their weakest pace since 2003 and industrial output rose the least in nearly three years. The report added to nerves about U.S.-China trade relations.

Chinese oil refinery throughput in November fell from October, suggesting an easing in oil demand, though runs were 2.9 percent above year-ago levels.

"Oil came under pressure out of poor economic data from China overnight, dampening enthusiasm for good oil demand growth in 2019 in light of a currently oversupplied market," said Andrew Lipow, president of Lipow Oil Associates in Houston.

Concerned by mounting oversupply, the Organization of the Petroleum Exporting Countries and other oil producers, including Russia, agreed last week to reduce output by 1.2 million barrels per day (bpd), or more than 1 percent of global demand.

U.S. energy firms cut four oil rigs in the week to Dec. 14, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday. The data is seen as an indicator of future production.

The International Energy Agency said on Thursday it expected a deficit in oil supply by the second quarter of next year, provided OPEC members and other key producers stuck closely to last week's deal to cut output.

As part of the agreement, de facto OPEC leader Saudi Arabia plans to reduce its output to 10.2 million bpd in January.

The IEA kept its 2019 forecast for global oil demand growth at 1.4 million bpd, unchanged from its projection last month, and said it expected growth of 1.3 million bpd this year.

Barclays said on Friday it expects oil prices to rebound in the first half of 2019 on falling inventories, Saudi Arabia's export cuts and an end to the Iran sanction waivers.

Hedge funds cut bullish wagers on U.S. crude to the lowest levels in more than two years in the week to Dec. 11, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. - Reuters