NEW YORK: Oil prices fell on Friday, extending losses amid concerns over falling Chinese demand after the world's second-largest oil consumer ordered factories to reduce output over worries of excess capacity.
North Sea benchmark Brent crude fell as low as $106.63 a barrel, heading for a second weekly decline after touching a three-and-a-half-month high last week. US oil traded as low as $104.10, continuing to fall after having reached a 16-month high of $109.40 last Friday. The fall in prices eased through the day, but both oil benchmarks finished the week with modest loses.
Earlier in the day, Chinese stock markets dropped after China's industry ministry ordered companies across 19 industries to close outdated capacity by the end of September.
The news from China overshadowed a report showing US consumer sentiment is at a six-year high.
"We have a shift in sentiment towards demand concerns following Chinese economic data this week," said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt. "Oil ought to be benefitting from the weaker dollar and strengthening US economy, but that is not the theme today."
Brent futures for September dropped 48 cents to settle at $107.17 per barrel, after posting a 46-cent gain on Thursday. US light crude for September fell 79 cents to settle at $104.70 a barrel. The North Sea benchmark's premium to West Texas Intermediate <CL-LCO1=R> held at $2.45.
Gasoline futures held steady, gaining 2 cents to trade at $3.04 a gallon. Market sources attributed gasoline's relative strength to concerns about tropical storm Dorian's anticipated arrival early next week.
China's manufacturing activity hit an 11-month low in July and its job market weakened, according to data from HSBC, adding to concerns of slower demand growth in China.
US crude output hit its highest since 1990 last week, while crude inventories showed a much smaller fall in the week to July 19 than earlier in the month, data from the US Energy Information Administration showed.
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