Oil prices fell on Friday after fresh Chinese economic data revived concerns of slowing economic growth, and while a faster-than-expected recovery in Saudi crude oil output this week eased concerns of major supply disruptions.
"Oil prices continued to slide lower after a drop in China's industrial profits in August reinforced worries that the world’s second-largest economy continues to decelerate," said Edward Moya, senior market analyst at New York-headquartered Oanda, which provides currency solutions to corporate clients.
Chinese industrial firms reported a contraction in profits in August, reversing the previous month's brief expansion, as weak domestic demand and a trade war with the US weighed on corporate balance sheets.
International benchmark Brent crude futures fell 0.8 per cent on Friday, from their previous settlement.
Whereas, US West Texas Intermediate crude futures dropped 0.4 per cent to $56.18 a barrel. WTI is a grade of crude oil used as a benchmark in oil pricing.
China is the world's largest oil importer and second-largest crude user. The US is the largest consumer of oil.
The rapid return of oil production from Saudi Arabia less than two weeks after the September 14 attacks also squashed risk premiums and dragged crude prices lower, analysts said.
"For most of the week ... the market has been trading lower as oil bulls have been discouraged by the quicker-than-expected return of Saudi oil output," said Stephen Innes, Asia Pacific market strategist at AxiTrader.
WTI futures were down 3.3 per cent so far for the week, marking the largest weekly loss in 10 weeks, while Brent was down 3.2 per cent on the week, its largest weekly loss in seven.
A surprise 2.4 million barrel build in US crude inventories last week also weighed on prices. US inventories may rise more over the near term, further pressuring prices, analysts said.
Emerging details connected to the impeachment inquiry into US President Donald Trump also helped dent demand sentiment, analysts said.
“Trump's impeachment inquiry also raises uncertainty surrounding his foreign policy [particularly on Iran and China]," said Margaret Yang Yan, a market analyst at CMC Markets.
"The market is assessing how this political turbulence may affect his ability and position to impose further sanctions on Iran, which will have significant impact on global oil supply."
