Oil prices head for weekly decline on signs of weakened Asian demand

An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken on Nov 12, 2021. Mandatory credit Kyodo/via REUTERS

Oil prices rose in early trade on Friday but were on track to fall 6 percent for the week, hovering near six-month lows, with investors fretting about weak energy demand in Asia combined with high U.S. crude production.

Brent crude futures rose 68 cents, or 0.9 percent, to $74.73 a barrel by 0136 GMT, while U.S. West Texas Intermediate crude futures gained 64 cents, also up 0.9 percent, to $69.98 a barrel.

Both benchmarks slid to their lowest since late June in the previous session. In a signal that traders believe the market may have become oversupplied, Brent and WTI are also in contango, a market structure in which front-month prices trade at a discount to prices a half year later.

Concerns about China’s economy have fueled the oil market’s downturn this week.

Chinese customs data showed that crude oil imports in November fell 9 percent from a year earlier as high inventory levels, weak economic indicators and slowing orders from independent refiners weakened demand.

READ: Oil prices ease on worries of waning demand in US and China

In India, fuel consumption in November fell after hitting a four-month peak in the previous month, hit by reduced travel in the world’s third biggest oil consumer as a festive boost fizzled.

Brent and WTI crude futures are on track to fall 5.8 percent and 6 percent for the week, respectively, despite a recent supply cut agreement from the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.

OPEC+ agreed to a combined 2.2 million barrels per day (bpd) in voluntary output cuts for the first quarter of next year.

READ: OPEC+ agrees to deepen voluntary oil output cuts

Saudi Arabia and Russia, the two biggest oil exporters, on Thursday called for all OPEC+ members to join the agreement on output cuts for the good of the global economy.

In the U.S., output remained near record highs of over 13 million barrels per day, U.S. Energy Information Administration data showed on Wednesday.