The FINANCIAL -- Oil prices were under pressure on Friday after U.S. crude entered a bear market in the previous trading session.
U.S. prices are off more than 20% since their highs in June, meeting a common definition of a bear market. Oil rallied earlier this year on expectations that cuts in drilling activity and investment will rebalance the market, but fell back in recent weeks as the global oversupply of crude showed little signs of receding, according to Nasdaq.
"We continue to have concerns that the oil market could be oversupplied for longer than we previously anticipated," said Jason Gammel, oil analyst at Jefferies.
Brent crude, the global oil benchmark, fell 0.2% to $55.17 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.5% at $48.70 a barrel.
Earlier on Friday, Chinese manufacturing data disappointed markets.
The Caixin China Manufacturing Purchasing Managers' Index's initial reading stood at 48.2 in July, compared with a final reading of 49.4 in June. The reading is at a 15-month low and was significantly below market expectations.
"The concerns about demand that had already emerged recently have been reinforced following weak Chinese data," said analysts at Commerzbank. China is the world's second-largest consumer of oil and signs of a slowdown in its economy usually spark worries in the oil market.
According to the bank, a combination of plentiful supply and concerns about demand is putting oil prices under pressure.
"OPEC is still making no attempt to curb production, and is still relying on producers with higher production costs cutting their output in response to the low prices. So far, however, there are only hints that this might be happening, apart from the marked fall in drilling activity in the U.S.," Commerzbank said.
Later on Friday, Baker Hughes Inc. will publish the latest U.S. oil drilling rig count. The number of rigs has fallen sharply since oil prices headed south last year. There are now about 60% fewer rigs working since a peak of 1,609 in October.
The rig count, however, has stabilized in recent weeks and the drop so far hasn't led to a significant fall in U.S. oil output which remains near multi-decade highs.
Nymex reformulated gasoline blendstock for August—the benchmark gasoline contract—rose 0.3% to $1.8577 a gallon. ICE gasoil for August changed hands at $504.00 a metric ton, down $6.75 from Thursday's settlement.