Oil prices ease on China demand worries

Oil prices drifted lower on Friday after rallying the day before, as geopolitical tensions and disruptions in U.S. oil production from a cold blast were countered by concerns over slow demand growth in China and ample supply forecasts.

Brent crude futures fell 23 cents, or 0.3%, to $78.87 a barrel by 0420 GMT, and U.S. West Texas Intermediate crude futures (WTI) slid 7 cents to $74.01.

Both benchmarks, which gained about 2% on Thursday as the International Energy Agency (IEA) joined producer group OPEC in forecasting strong growth in global oil demand, are on track to end the week around 1-2% higher.

On Thursday, the IEA again raised its 2024 global oil demand growth forecast, though its projection remains lower than OPEC’s expectations, and said the market looked well supplied because of strong growth outside the producer group.

The IEA expects world oil supply to rise by 1.5 million bpd to a new high of 103.5 million bpd in 2024, fuelled by record-setting output from the United States, Brazil, Guyana and Canada.

The U.S. Energy Information Administration (EIA) on Thursday reported a larger-than-expected draw in crude inventories of 2.5 million barrels on strong demand from refineries in the week ended Jan. 12, but gasoline and distillate inventories rose to multi-year highs.

Meanwhile, about 40% of oil output in North Dakota, a top oil-producing U.S. state, remained shut-in due to extreme cold weather and operational challenges, the state’s pipeline authority said on Wednesday.

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