Oil rose above $108 again a barrel on Friday a day after seeing its largest one day fall in three weeks on fears of an Oklahoma supply squeeze.
Analysts said concern about China’s demand outlook and the prospect of growing non-OPEC supply was offsetting lower inventories in the United States and concern about possible disruption to flows due to strife in Egypt.
Brent crude for August was 57 cents higher at $108.30 a barrel by 1230 GMT, after touching a low of $107.28. US crude was up cents at $105.80, on track for a third weekly rise.
On Thursday the contract hit a high of $108.93 before falling back to $107.45, as fears of a supply squeeze at the contract’s delivery point in Cushing, Oklahoma, eased.
China’s finance minister signalled that Beijing may be willing to tolerate economic growth in the second half of the year significantly below 7%, marking the most sobering comment to date from a senior policymaker on the country’s slowdown.
That came after warnings from China earlier this week of a “grim” outlook for trade after a surprise fall in June exports, raising concerns that the world’s second biggest oil consumer would no longer be the buoyant force for oil it has been for the last decade.
However improved sentiment on the outlook for the United States and lingering concern that violence in Egypt could disrupt supply through the Suez Canal underpinned prices.
Brent remains close to a three-month peak reached the session before on political uncertainty in Egypt, falling US crude inventories and a weaker US dollar
Investors also netted profits on Thursday after a three-week rally pushed Brent and WTI crude futures to multi-month highs.
US data on Wednesday showed the biggest two-week drop on record in crude stockpiles, while refinery production hit a five-year high.
New York Harbor gasoline futures have topped $3 per gallon for the first time since March with the onset of the summer driving season.
“While overall fundamentals are still supportive, the market is taking a breather following the sharp increases earlier in the week,” Amrita Sen at Energy Aspects said.
“Moreover the sharp rise in oil prices has started to dent refinery margins, both in Europe and in the US, capping any upside currently.”
Also pressuring prices, non-OPEC supply is set to grow at the fastest pace in decades next year, the International Energy Agency said on Thursday, and China’s weaker appetite for commodities continues to drag on prices.