Crude-oil futures were lower in Asian trading Friday, but still hovering near four-month highs and headed for a fifth week of gains as Saudi Arabian oil supply eases and the Chinese economy shows further signs of a pickup.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at $93.73 a barrel at 0633 GMT, down $0.09 in the Globex electronic session. February Brent crude on London's ICE Futures exchange fell $0.48 to $111.41 a barrel.
The latest economic data from China, which is a key driver of global oil demand, showed encouraging trade numbers for December being balanced out by higher-than-expected inflation.
China's economy has picked up steam in the last few months after a prolonged slowdown, but accelerating inflation could constrain the government's ability to take further measures to support growth.
Saudi Arabia -- the world's top oil exporter -- cut oil production by close to 5% in December, the deepest cut in almost three years.
"Saudi Arabia is surprisingly being proactive to what we believe is an oversupplied oil market," said analysts at Raymond James.
In 2011, the kingdom lifted production to fill supply gaps caused by the fighting in Libya and kept it high as the West imposed tough oil sanctions against Iran last year.
"Although the sharp Saudi production cuts last month toward 9 million barrels a day were widely mentioned as a bullish consideration, we viewed the reduction as further evidence of global demand weakening and consequently deserving of a bearish checkmark," said Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates.
"OPEC shipments appear to be on the rebound this month" by about 220,000 barrels a day, according to tanker tracker indications, said Mr. Ritterbusch.
Still, tensions between the Iraqi government and the Kurdistan region could result in renewed supply risks from the OPEC member. Genel Energy, headed by former BP-chief Tony Hayward, said Thursday it plans to export up to 20,000 barrels a day of crude from Kurdistan in the coming weeks.
Iraq Thursday issued a strong warning to companies which are selling Iraqi crude oil without the central government's approval.
"Although the volumes in question are minor, the move will nonetheless be seen as a provocation by the central government in Baghdad and has clearly raised the level of supply risk within Iraq," said analysts at JBC Energy.
In other news, the 120,000 barrel-a-day Marib-Ras Isa pipeline in Yemen -- a non-OPEC oil producer -- was halted late Thursday after a blast.
Nymex crude continues to trade stronger compared with Brent, with the gap between the two benchmarks narrowing to $17.66. The spread has narrowed by about $3.50 since end-December on news the Seaway Pipeline will boost capacity this weekend.
Rising U.S. crude production had created bottlenecks and sent inventories at Cushing, Oklahoma, to a record high, weighing on Nymex prices. But the high inventories could be reduced soon with the expansion of the Seaway Pipeline, allowing the supply surplus in the U.S. Midwest to be pumped to Gulf Coast refineries.
Nymex reformulated gasoline blendstock for February -- the benchmark gasoline contract -- fell 158 points to $2.7775 a gallon, while February heating oil traded at $3.0407, 136 points lower.
ICE gasoil for February changed hands at $950.00 a metric ton, down $9.25 from Thursday's settlement.
Write to Jacob Gronholt-Pedersen at jacob.pedersen@dowjones.com
