Rally in crude oil prices losing steam as week winds down on concerns that European economies still have work to do in order to leave the recession behind. File Photo by Monika Graff/UPI | License Photo
NEW YORK, June 10 (UPI) -- Crude oil prices threatened to drift back below $50 per barrel Friday on concerns major world economies have yet to put the recession behind them.
Angel Gurria, the secretary-general of the Organization for Economic Cooperation and Development, said there's reason for optimism in a European economy, where contraction in 2014 pressured markets worldwide. Gradual growth has returned and regional gross domestic product is on pace to increase by nearly 2 percent by 2017, up from the 1.8 percent growth expected this year.
As Greece dragged on regional growth, the European Union reported fourth quarter gross domestic product grew by 0.3 percent for member states that use the euro to 1.5 percent year-on-year. That beat U.S. growth during the same period by 0.1 percent.
Gurria said key challenges remain, however. If the so-called Brexit strategy emerges successful from London, long-term growth for the European Union could be jeopardized.
"Europe has put the worst of the crisis behind it, but there is still much more to do to support a full robust recovery that benefits all Europeans," he said from Paris.
Crude oil prices declined Thursday after U.S. reports found some of the short-term disruptions in global oil supply, notably from Canada, were starting to ease. Oil markets greeted the OECD report with caution at the start of trading in New York.
The price for Brent crude oil moved lower by 1.4 percent to start the day at $51.20 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, fell 1.6 percent to $49.75 per barrel. WTI passed the $50 mark earlier this week for the first time in nearly a year.
OECD expectations dampened demand prospects. Global consumption of petroleum and other fuels is expected to increase by 100,000 barrels per day next year, though declines in demand were predicted by European members of the OECD.
Prospects elsewhere for economic recovery are improving, however, as the Russian Central Bank said Friday growth was "imminent." Russia is expected to linger in recession for the rest of the year, but show growth close to 2 percent by 2018.
Disruptions to the global supply of oil remain nonetheless. The Niger Delta Avengers, a militant group waging war on oil companies in the region, said Friday it blew up one of the main oil pipelines in the area, curbing output from a member of the Organization of Petroleum Exporting Countries.
Friday's downturn could be influenced later in the day after Baker Hughes releases figures on activity in the global exploration and production sector. A recent uptick in rig activity in the United States was the first in months and any further growth could signal production gains could emerge from shale basins in the Lower 48.