LONDON - Oil prices dipped on Friday, ending a two-day rally, as a glut of crude and refined products weighed on markets and investors eyed a possible stutter in China's imports.
U.S. West Texas Intermediate (WTI) crude futures fetched US$41.83 per barrel at 1211 GMT, down 10 cents from their last close, after trading as low as $41.44. They were on track roughly to break even on the week.
Brent crude futures were trading at $44.15 per barrel, down 14 cents but set for a weekly gain of more than 3.5 per cent.
Downward pressure returned as overproduction in crude and refined products has left onshore storage tanks brimming and triggered the chartering of tankers to store unsold fuel.
There are also growing worries that China's imports are weakening from records set in 2015 and this year.
"Signs of fatigue are already apparent and include a notable dip in Chinese crude oil imports," PVM's Stephen Brennock wrote, adding that spare capacity in the country's strategic storage space is less than 100 million barrels.
"A major pillar of oil demand is therefore on course to ease considerably over the coming months," Brennock said.
Still, China surpassed South Korea as the top Asian buyer of North Sea Forties crude this year, while trading house Trafigura targeted China's newest buyers by extending credit to two independent refiners.
Oil prices were still more than $2 per barrel above the week's lows, which most analysts attributed to short-covering. Investors added the equivalent of 56 million barrels of short positions in the three main Brent and WTI futures and options contracts in the week to July 26.
"This week has been pretty much a technical market," said Olivier Jakob, managing director of PetroMatrix. "I don't think there has been any strong reversal in the fundamentals."
Yahoo's standalone messenger software, the main tool used by traders to communicate since the late 1990s, is due to shut down on Friday, leaving market participants with a fragmented choice of alternatives, including Eikon Messenger, ICE Instant Messaging, Symphony, Bloomberg Messenger, Twitter and WhatsApp.
In pricing and analytics, leading commodity price reporting agency S&P Global Platts has agreed to acquire global energy market analysis firm PIRA Energy Group.
