Oil dips on manufacturing downturn, but OPEC cuts offer support

Despite the global market turmoil, traders said oil prices are expected to receive some support as supply cuts announced late last year by the Organization of the Petroleum Exporting Countries start to kick in.

Oil prices dropped on Friday after the United States followed most other major economies into a manufacturing downturn, although supply cuts by producer club OPEC kept declines in check.
International Brent crude futures were down 21 cents, or 0.4 percent, at 0258 GMT at $55.74 a barrel.

U.S. West Texas Intermediate (WTI) crude oil futures were at $47.05 per barrel, down 4 cents, or 0.1 percent. Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest U.S. slowdown in growth for more than a decade, as the trade conflict with China, falling equity prices and increasing uncertainty started to take a toll on the world’s biggest economy.

Leading economies in Asia and Europe have already reported a fall in manufacturing activity. “Led by a sharp fall in the U.S. ISM and China’s PMI falling below 50, the global manufacturing PMI fell to 51.5 in December (52.8 previously), a 27-month low,” Morgan Stanley said in a note following the release of the ISM data.

“The recent run of incoming data, coupled with global tightening financial conditions, has increased the downside risks to an already moderating global growth outlook,” the U.S. bank said.