Prices rallied as Saudi Arabia reduced output even before OPEC's cuts deal went into effect this month.
Spot prices ranged between $45.61/bbls and $47.66/bbls, ending on the $47 handle.
Opec oil supply fell by 460,000 barrels a day (bbl/day) between November and December, to 32.68 million barrels a day, a Reuters survey found on Thursday, as top exporter Saudi Arabia made an early start to a supply-limiting accord, while Iran and Libya posted involuntary declines.
Prices pared gains on Friday after data from the U.S. Energy Information Administration showed a sharp increase in product inventories as refiners ramped up utilization rates USOIRU=ECI to 97.2 percent of capacity, the highest rate on record for this time of year. "And you've got OPEC cutting".
But oil gain's were checked through the day by USA stock markets diving on news from late Wednesday that Apple (NASDAQ:AAPL) was lowering its revenue forecast blaming weakness in China.
"The omens are far from encouraging", said Stephen Brennock of oil broker PVM, citing rising non-OPEC supply and the likelihood of further increases in oil inventories. The Saudis have used the price-boosting strategy in the past to shrink USA stockpiles, the most transparent and closely-watched inventories in the world.
Production from those 11 countries is now 140,000 barrels a day below their October level, so they would need to cut about another 660,000 barrels a day to implement the agreement.
Iraq, which bridled at the requirement to cut shipments previous year, bolstered output by 130,000 barrels a day in December to 4.7 million a day, according to the survey.More news: Escape room fire kills five teenagers in Poland
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"The current bearish bias will therefore continue in the near term and it stands to reason that oil will struggle to break out from its current trough", he said.
Oil LCOc1 has slid to $56 a barrel from a four-year high of $86 in October on signs of excess supply.
"Sentiment, however, is weak with (U.S. President Donald) Trump's trade war with China a major hurdle". "Low gas prices are like another Tax Cut!" he wrote on his official Twitter account on Tuesday.
The production data is stale which means USA output may have risen, however, due to the expected production cuts, Russian output is expected to decline.
Adding to concern about economic slowdown, a series of purchasing managers' indexes for December mostly showed declines or slowdowns in manufacturing activity across Asia - the main growth region for oil demand.
The slowdown in China and turmoil in stock and currency markets appears to be making investors nervous, including in oil markets.
USA oilfields contain the light, sweet crude that is flawless for gasoline, not the heavier sour oil from the Middle East that American refineries need for turning out diesel and other middle distillates. While OPEC's output plunged by the most in nearly two years last month and producers have pledged to curb supplies through the first half of 2019, concerns about oversupply prevail as stockpiles at America's main storage hub show signs of swelling. The United Arab Emirates also cut its overseas sales.