Oil inches higher, but remains on track for weekly loss
Brent rises on signs of surging demand in China, although traders are concerned about effect of trade war on economic activity
Singapore — Oil prices nudged higher on Friday on signs of surging demand in China, the world’s second-biggest oil user, though prices are set to fall for a second week amid concerns the China-US trade war is limiting overall economic activity.
Brent crude oil futures were trading at $79.51 a barrel at 5.21am GMT, up 22c, or 0.3%, from their last close.
US West Texas Intermediate (WTI) crude futures were up 19c, or 0.3%, at $68.84 a barrel.
For the week, Brent crude was 1.1% lower while WTI futures were down 3.5%, putting both on track for a second consecutive weekly decline.
Refinery throughput in China, the world’s second-largest oil importer, rose to a record high of 12.49-million barrels a day (bbl/day) in September as some independent plants restarted operations after prolonged shutdowns over summer to shore up inventories, government data showed on Friday.
The refinery consumption may rise through the fourth quarter as several state-owned Chinese refiners return to service after maintenance.
Undermining the strong refinery data, China did on Friday report its weakest economic growth since 2009 in the third quarter, with GDP expanding by only 6.5%, missing estimates.
The weak economic data raised concerns that the country’s trade war with US is beginning to have an impact on growth, which may limit China’s oil demand.
The trade war concerns combined with surging US oil stockpiles reported on Thursday are capping the day’s price gains.
US crude stocks last week climbed 6.5-million barrels, the fourth consecutive weekly build, almost triple the amount analysts had forecast, the US Energy Information Administration said on Wednesday.
“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 Asia-Pacific at Oanda in Singapore.
Inventories rose sharply even as US crude production slipped 300,000bbl/day to 10.9-million barrels a day last week due to the effects of offshore facilities closing temporarily for Hurricane Michael.
Meanwhile, Iranian oil exports may have increased in October when compared to the previous month as buyers rush to lift more cargoes ahead of looming US sanctions that kick in on November 4.
An unprecedented volume of Iranian crude oil is set to arrive at China’s northeast Dalian port this month and in early November before US sanctions on Iran take effect, according to an Iranian shipping source and data on Refinitiv Eikon.
So far, a total of 22-million barrels of Iranian crude oil loaded on supertankers owned by the National Iranian Tanker Company are expected to arrive at Dalian in October and November, the data showed. Dalian typically receives between 1-million and 3-million barrels of Iranian oil each month, according to data that dates back to January 2015.