Oil prices rose on signs of surging demand in China, the world’s second-biggest oil consumer, although the market was heading for a second week of losses on rising U.S. inventories and concern that trade wars were curbing economic activity, Reuters reported.
Benchmark Brent crude oil LCOc1 jumped $1.14 a barrel, or 1.4 percent, to a high of $80.43 before easing back to around $80.29, up $1.00 by 1330 GMT. U.S. light crude CLc1 was 60 cents higher at $69.25.
For the week, Brent crude was 0.2 percent lower while U.S. crude was down 2.9 percent, both on track for a second consecutive weekly decline, and down around $7 a barrel from four-year highs reached in early October.
“After two consecutive days of slide the oil market is staging a half-hearted come-back,” said Tamas Varga, analyst at London brokerage PVM Oil. “Maybe it is down to some pre-weekend short-covering.”
Refinery throughput in China, the world’s largest oil importer, rose to a record high of 12.49 million barrels per day (bpd) in September as some independent plants restarted operations after prolonged shutdowns over the summer to shore up inventories, government data showed on Friday.
Undermining sentiment were official figures showing China’s economic growth slowed in the third quarter to its weakest pace since the global financial crisis, with gross domestic product expanding by only 6.5 percent, missing estimates.
The data raised concerns that China’s trade war with United States was beginning to hit growth, which may limit oil demand.
Also denting confidence was evidence this week that U.S. oil inventories had risen sharply.
U.S. crude stocks last week climbed 6.5 million barrels, marking a fourth straight weekly build and almost triple the amount analysts had forecast, the U.S. Energy Information Administration said on Wednesday. [EIA/S]
“EIA Weekly Petroleum Status Report was a complete shocker sending oil markets spiralling lower amidst some concerning development for oil bulls,” said Stephen Innes, head of trading APAC at OANDA in Singapore.
Inventories rose sharply even as U.S. crude production slipped 300,000 barrels per day (bpd) to 10.9 million bpd last week due to the effects of offshore facilities closing temporarily for Hurricane Michael.
Meanwhile, Iranian oil exports may have risen in October as buyers took cargoes before U.S. sanctions on Tehran take effect from Nov. 4.
An unprecedented volume of Iranian crude oil is set to arrive at China’s northeast port of Dalian this month and in early November before then, according to an Iranian shipping source and data on Refinitiv Eikon.
Reporting by Christopher Johnson in London and Roslan Khasawneh in Singapore; editing by Jason Neely and Kirsten Donovan
