Oil prices rebound but still weak due to oversupply

LONDON: Oil prices rebounded on Friday, recovering slightly from heavy losses this week, but remained close to the lowest levels in over a year as rising US inventories and concern over global economic growth rattled markets.

Brent crude oil was up 69 cents, or 1.32 percent, at $52.85 a barrel by 1130 GMT, having earlier risen more than 3 percent. It had dropped 4.2 percent on Thursday.

US light crude was up 96 cents, or 2.15 percent, at $45.57, after rising 3.6 percent in early trade.

Oil prices fell to their lowest in almost 18 months this week and are down more than 20 percent for the year, depressed by ample supplies that have filled fuel tanks worldwide.

Stock markets in Europe and Asia rose on Friday after Wall Street ended a volatile session with big gains, but fears of further price swings and worries about US politics kept investors cautious.

"For the time being, the stock market and the oil market will echo each other," said Ahn Yea-Ha, commodity analyst at Kiwoom Securities. "Global economic slowdown worries have been weighing on stock market movements, and oil prices are not free from those concerns."

Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude prices had been pressured by slowing economic growth "coupled with the expectation of strong US production in the new year".

US crude inventories rose 6.9 million barrels to 448.2 million barrels in the week to Dec. 21, according to the American Petroleum Institute. The US Energy Information Agency (EIA) will publish its data at 1600 GMT.

"If the EIA's data shows a rise in US crude inventories, that would cap price gains," Ahn said.

The United States has emerged as the world's biggest crude producer this year, pumping 11.6 million barrels per day (bpd), more than both Saudi Arabia and Russia.

Russian Energy Minister Alexander Novak said on Thursday that Russia would cut its crude output by between 3 million and 5 million tonnes in the first half of 2019 as part of a deal between producers.

Earlier this month, the Organization of the Petroleum Exporting Countries and its allies including Russia, agreed to cut output by 1.2 million bpd, or more than 1 percent of global consumption, starting in January.

Markets will be closed on Tuesday for the New Year's Holiday and trading is expected to be light on Monday.

"Things will only start to get slowly back to normal at the end of next week," said Olivier Jakob of Swiss energy consultancy Petromatrix. "Until then we continue to view the crude oil futures as very difficult to trade and too dependent on the variations of the equity markets."