TOKYO: Oil prices fell on Friday, with Brent slipping away from the US$70 mark after briefly rising above that level in the previous session, hurt by supply concerns and worries about progress in U.S.-China trade talks.
International benchmark Brent futures dropped 26 cents, or 0.4 percent, to US$69.14 a barrel by 0229 GMT, having touched US$70.03 in the previous session, the highest since Nov. 12.
U.S. West Texas Intermediate (WTI) crude was down 1 cent at US$62.09. The contract fell 36 cents in the previous session, having hit US$62.99 on Wednesday, its highest since November.
Still, Brent is heading for a second week of gains, while WTI is on track for a fifth consecutive weekly rise.
Oil prices have gained this year after the Organization of the Petroleum Exporting Countries and producer allies such as Russia, known as OPEC+, agreed to cut output by 1.2 million barrels per day (bpd) to prevent a supply overhang from growing.
Prices are now finely balanced, said Abhishek Kumar, senior energy analyst at Interfax Energy in London
"The OPEC+ group has so far maintained a high compliance with their output-cut deal, which together with positive economic data from the U.S. and China, are supporting oil prices," Kumar said.
"Nevertheless, market participants are worried that persistently rising oil production and exports from the U.S. could undo much of the OPEC+ effort," he said.
U.S. crude oil stockpiles soared unexpectedly last week as imports climbed and production edged higher to a new record, the Energy Information Administration said on Wednesday.
Brent has gained nearly 30 percent this year, while WTI has risen nearly 40 percent, underpinned by the OPEC production cuts, along with U.S. sanctions on Iranian and Venezuelan crude.
(Graphic: Oil supply vs demand - https://tmsnrt.rs/2CXO9gl)
U.S. President Donald Trump said on Thursday a trade deal with China was getting very close and could be reached in about four weeks, but he said sticking points included tariffs and intellectual property theft.
"A summit in April is looking unlikely despite the comments from both sides on how well the negotiations are going," Alfonso Esparza, senior market analyst at OANDA, said in a note.
"After much talk there is still nothing to show for it, which is once again putting downward pressure on energy demand going forward," Esparza said.
Other bearish economic indicators this week included lower German factory orders, which fell in February by the sharpest rate in more than two years.
Orders were hit by a slump in foreign demand, compounding worries that Europe's largest economy had a weak start to the year.
(Reporting by Aaron Sheldrick; editing by Richard Pullin)