LONDON—Oil prices were under pressure on Friday after U.S. crude
entered a bear market in the previous trading session.
U.S. prices are off more than 20% since their highs in June,
meeting a common definition of a bear market. Oil rallied earlier
this year on expectations that cuts in drilling activity and
investment will rebalance the market, but fell back in recent weeks
as the global oversupply of crude showed little signs of
receding.
"We continue to have concerns that the oil market could be
oversupplied for longer than we previously anticipated," said Jason
Gammel, oil analyst at Jefferies.
Brent crude, the global oil benchmark, fell 0.2% to $55.17 a
barrel on London's ICE Futures exchange. On the New York Mercantile
Exchange, West Texas Intermediate futures were trading up 0.5% at
$48.70 a barrel.
Earlier on Friday, Chinese manufacturing data disappointed
markets.
The Caixin China Manufacturing Purchasing Managers' Index's
initial reading stood at 48.2 in July, compared with a final
reading of 49.4 in June. The reading is at a 15-month low and was
significantly below market expectations.
"The concerns about demand that had already emerged recently
have been reinforced following weak Chinese data," said analysts at
Commerzbank. China is the world's second-largest consumer of oil
and signs of a slowdown in its economy usually spark worries in the
oil market.
According to the bank, a combination of plentiful supply and
concerns about demand is putting oil prices under pressure.
"OPEC is still making no attempt to curb production, and is
still relying on producers with higher production costs cutting
their output in response to the low prices. So far, however, there
are only hints that this might be happening, apart from the marked
fall in drilling activity in the U.S.," Commerzbank said.
Later on Friday, Baker Hughes Inc. will publish the latest U.S.
oil drilling rig count. The number of rigs has fallen sharply since
oil prices headed south last year. There are now about 60% fewer
rigs working since a peak of 1,609 in October.
The rig count, however, has stabilized in recent weeks and the
drop so far hasn't led to a significant fall in U.S. oil output
which remains near multi-decade highs.
Nymex reformulated gasoline blendstock for August—the benchmark
gasoline contract—rose 0.3% to $1.8577 a gallon. ICE gasoil for
August changed hands at $504.00 a metric ton, down $6.75 from
Thursday's settlement.
Eric Yep contributed to this article.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
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