Oil prices edged up on Friday amid hopes the United States and China could soon settle their trade disputes, although data from China stoked concerns over an economic slowdown that could dent demand for fuel.
International Brent crude oil futures were at $61.06 per barrel at 0755 GMT, 22 cents, or 0.4 percent, above their last close.
U.S. West Texas Intermediate (WTI) futures were at $53.86 per barrel, up 7 cents from their last settlement.
Oil prices were supported as U.S. President Donald Trump said on Thursday he would meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal.
But crude markets were weighed down by a survey on Friday that showed China’s factory activity shrank by the most in almost three years in January amid slumping orders, reinforcing fears a slowdown in the world’s second-largest economy is deepening.
With China’s industry a key consumer of fuels like diesel, such a slowdown would also likely hit fuel demand.
Despite these concerns, traders said oil markets overall are being supported by supply cuts from the Organization of the Petroleum Exporting Countries (OPEC), which according to a Reuters poll pumped 30.98 million barrels per day (bpd) in January, down 890,000 bpd from December.
In Venezuela, meanwhile, U.S. sanctions imposed on state oil firm PDVSA this week are keeping tankers stuck at ports as American refineries that rely on Venezuelan feedstocks cut back operations.
“The latest U.S. sanctions could directly halt around 500,000 barrels per day (bpd) of Venezuelan exports to the U.S.,” Citi bank said.
Much Venezuelan crude oil is rated as heavy and requires the light petroleum naphtha, much of it supplied from the United States, for dilution before export to refineries.
“An additional 350,000 bpd of Venezuelan oil output is at risk due to the lack of U.S. dilutents, a result of the U.S. product exports ban with immediate effect,” Citi said.
Some relief especially to U.S. refiners may come in the form of Canadian heavy crude, despite infrastructure constraints between the two countries.
“The Alberta government announced it was increasing the oil production curtailment limit for February and March to 3.63 million bpd, which translates in restoring 75,000 bpd of the 325,000 bpd cut announced in December,” U.S. investment bank Jefferies said on Friday.
