Investing.com - U.S. oil turned sharply lower on Friday, amid doubts over the extent of the production cuts promised by major crude producers and as downbeat Chinese trade data weighed.
U.S. crude futures for February delivery were down 0.96% at $52.48 a barrel, after hitting a three-day high of $53.50 on Thursday.
On the ICE Futures Exchange in London, the March Brent contract declined 0.89% to trade at $55.50 a barrel.
Oil prices were boosted on Thursday after Saudi Energy Minister Khalid al-Falih said the kingdom reduced output to less than 10 million barrels a day, going beyond its obligations under a deal between OPEC and other producers.
The comments came after Kuwaiti Oil Minister Essam Al-Marzouq said his country cut output by 133,000 barrels a day to 2.7 million barrels.
The optimism was short-lived however, as traders began to worry on Friday whether or not other oil producers will end up reducing their output levels as much as expected.
January 1 marked the official start of the deal agreed by OPEC and non-OPEC member countries such as Russia in November last year to reduce output by almost 1.8 million barrels per day.
If carried out as planned, the deal should reduce global supply by about 2%.
Traders were also cautious after data on Friday showed that China’s trade surplus narrowed to $40.82 billion in December from $44.61 billion the previous month, confounding expectations for a surplus of $46.50 billion.
The data fueled more concerns over the strength of the world’s second largest economy and therefore future oil demand.
Meanwhile, a slight rebound in the U.S. dollar on Friday also dampened demand for crude oil. Oil prices typically weaken when the U.S. currency stregnthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
But the greenback’s gains were capped since U.S. President-elect Donald Trump failed to offer details on his promises to boost fiscal spending and cut taxes at a highly-anticipated news conference on Wednesday.
In addition, St. Louis Federal Reserve bank president James Bullard said on Thursday that the election of Donald Trump has not yet switched the U.S. economy to a new "regime" that requires a quick rise in interest rates, which can remain "fairly low" at least through 2017.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.33% at 101.13, not far from the previous session’s one-month low of 100.70.