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Oil prices make gains after Friday’s slump

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Oil prices make gains after Friday's slump

Prices of crude oil made marginal gains on Monday after losing nearly 8 percent on Friday, with Brent going back to over $60 per barrel.

Front-month Brent crude oil futures rose $1.31, or 2.2 percent, to $60.11 per barrel as at 0643 GMT while U.S. West Texas Intermediate, WTI, crude futures, were up 66 cents, or 1.3 percent, at $51.08 per barrel.

The gains have somewhat paid off for Friday’s selloff, which traders dubbed ‘Black Friday’.

However, sentiment remained weak amid a broad sell-off in financial markets in past weeks, Reuters said in a report.

Reacting to Friday’s falls in Brent and WTI, China’s Shanghai crude futures on Monday fell by 5 percent, hitting their daily downside-limit.

The downward pressure comes from surging supply and a slowdown in demand growth which is expected to result in an oil supply overhang by next year.

Read also: World Bank delivers mixed verdict on Nigeria’s economy, projects fiscal deficit to widen

According to analysts at Fitch Solutions on Monday, “2019 will be a choppy year for the oil market as questions surrounding the prospect of a slowing global economy and a supply surplus are expected to increase.”

Fitch also said that even an expected supply cut led by the Organization of the Petroleum Exporting Countries, OPEC, following an official meeting on Dec. 6 “may not be enough to counteract the bearish forces.”

Oil markets are also being affected by a downturn in wider financial markets.

In a note released on Sunday, the US bank, Morgan Stanley said: “2018 clearly marked the end of the 10-year Asia credit bull market due to tightening financial conditions in Asia (especially China), and we expect this to remain the case in 2019. We don’t think that we are at the bottom of the cycle yet.”

Oil markets have also been weighed down by a strong U.S. dollar, which has surged against most other currencies this year, thanks to rising interest rates that have pulled investor money out of other currencies and also assets like oil, which are seen as more risky than the greenback.

According to analysts, anything denominated against the USD is under pressure right now.

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