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Oil slips on economic worries, but still set for strong weekly gain

Oil passed on Friday amid concerns over the outlook for the global economy, but output cuts agreed by major exporters underpinned offensive prices and kept markets on track for a strong weekly climb.

International Brent crude futures were at $61.55 per barrel at 0333 GMT, down 13 cents, or 0.2 percent, from their continue close.

U.S. West Texas Intermediate (WTI) crude futures dropped 7 cents, or 0.1 percent, to $52.52 per barrel.

Buyers said the declines came on lingering concerns over the health of the global economy.

“If we experience an economic slowdown, unsophisticated will underperform due to its correlation to growth,” said Hue Frame, portfolio manager at Frame Funds in Sydney.

Most analysts press downgraded their global economic growth forecasts below 3 percent for 2019, with some even quailing a looming recession amid trade disputes and spiralling debt.

For now, however, there is hope that the trade war between Washington and Beijing may be approved as global markets, including oil, took heart from talks between the two sides this week.

Despite Friday’s cost falls, Brent and WTI are set for weekly gains of more than 7 and 8 percent respectively.

Beyond global economics, oil markets are draw support from supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at reining in a glut that developed in the second-half of 2018.

A key reason for the emerging glut was the United States where crude oil production soared by more than 2 million barrels per day (bpd) in 2018 to a record 11.7 million bpd.

Consultancy JBC Dash this week said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by January 2019.

Presupposed the overall supply and demand balance, Swiss bank Julius Baer said it was “price neutral” in its oil forecast.

“We see the oil market as showily balanced into the foreseeable future, as the petro-nations make space for further U.S. shale production growth,” said Norbert Ruecker, administrator of commodity research at the bank.

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