Oil up but set for weekly loss on stock build, trade row
LONDON (Reuters) - Oil prices rose on Friday 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.
Benchmark Brent crude oil LCOc1 was up 70 cents a barrel at $79.99 by 1100 GMT. U.S. light crude CLc1 was 40 cents higher at $69.05.
For the week, Brent crude was 0.5 percent lower while U.S. crude was down 3.2 percent, both on track for a second consecutive weekly decline, and down around $7 a barrel from four-year highs reached in early October.
“It looks like the oil market moved too fast too far,” said Carsten Menke, analyst at Swiss bank Julius Baer. “Prices are down around 8 percent from recent highs, trading back below $80 a barrel. Sentiment in the futures market seems to have cooled.”
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
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