Global oil markets are still well supplied thanks in part to a spike in US output. PHOTO: REUTERS
The bearish sentiment appeared to outweigh the possibility that turmoil in Venezuela may lead to tighter global supply if the United States imposes sanctions on Venezuelan exports.
Brent crude oil futures were at $60.86 a barrel at 1215 GMT, down $0.23 or 0.38%. Brent has shed about 2.9% since the start of trade on Monday and is on track to post its first week of losses in four weeks.
US West Texas Intermediate (WTI) crude futures were trading at $53.06 per barrel, down $0.07, or 0.13%.
Oil prices up 1% on fall in US stocks
Amid violent street protests, Venezuela's opposition leader Juan Guaido declared himself interim president this week, winning recognition from Washington and parts of Latin America.
Nicolas Maduro, the country's leader since 2013, responded by breaking relations with the United States.
RBC Europe predicted that sanctions could nearly double projected output shortfalls from the troubled exporter. "Venezuelan production will decline by an additional 300,000-500,000 barrels per day (bpd) this year but such punitive measures could expand that outage by several hundred thousand barrels."
Global oil markets are still well supplied, however, thanks in part to a spike in US output.
Record US production would likely offset any short-term disruptions to Venezuelan supply due to possible US sanctions, Britain's Barclays said in a note. The bank cut its 2019 average Brent forecast to $70 a barrel, from $72 previously.
The output surge has swollen US fuel stocks, and crude inventories rose by 8 million barrels last week, according to official data released on Thursday.
Oil drops nearly 2% as China slowdown bites
Analysts have predicted a more balanced market due to a production cut pact by the Organisation of Petroleum Exporting Countries (OPEC) and its allies including Russia, as well as potential export disruptions in Venezuela, Iran and Libya.
"While the current state of affairs is price constructive for oil, the market is hesitant when it comes to the global outlook," Harry Tchilinguirian, Global Head of Commodity Markets Strategy at BNP Paribas, told the Reuters Global Oil Forum.
Demand may start to stutter because of a global economic slowdown, which is likely to dent fuel consumption.
A trade dispute between the US and China and tightening financial conditions around the world have hurt manufacturing activity in most economies and dragged China's growth last year to the weakest in nearly 30 years.
According to Reuters' polls of hundreds of economists worldwide, a synchronised global economic slowdown is under way and would deepen if the US-China trade war escalated.
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