LONDON: Brent crude slipped towards $97 a barrel on Friday, not far above 26-month lows reached at the start of the week, despite signs oil producers may cut production to arrest price falls.
Brent hit its lowest point since July 2012 on Monday as oil supply overwhelmed lacklustre demand in Europe and Asia with a glut of high-quality, light oil pushing North Sea crude for immediate delivery to big discounts below futures.
But OPEC's secretary-general responded to the price plunge, saying he expected the cartel, which pumps around a third of the world's oil, to reduce production next year.
Libya's oil production has also been hit by conflict, curbing a sharp increase in output in recent months.
Brent was down 20 cents at $97.50 a barrel by 0815 GMT, while US crude was down 40 cents at $93.12. Both contracts saw their biggest drop in more than two weeks on Thursday. "It's quite difficult to find any bullish factors.
The Chinese and European economies are weak and are putting on pressure," said Tetsu Emori, commodity fund manager at Astmax. A stronger dollar has also dragged on oil markets as it makes commodities denominated in the US currency more expensive for holders of other currencies.
The dollar strengthened against major currencies, with the dollar index hitting its highest in more than four years, underpinned by an improved US job market.
Weak home prices in China added to the gloom over the world's second-largest economy, intensifying fears of a slowdown. This week the Organization for Economic Cooperation and Development slashed its growth forecasts for major developed economies to 0.8 percent this year from 1.2 percent.
Elsewhere, weekly US data showed a sharp spike in crude stockpiles, which could be exacerbated as the country's refineries head into a maintenance season.
Investors remain worried by geopolitical tension in the Middle East.
Jonathan Barratt, chief investment officer at Ayers Alliance, said an escalation in the conflict with Islamic State militants who have seized large parts of Iraq and Syria could push up prices.
"All it takes is one suicide bomber in a European compound in Saudi Arabia, Bahrain or any of those countries and people will say 'game on'," he said. "That to me is the biggest risk at the moment."
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