Singapore – Oil prices nudged higher on Friday on signs of surging demand in China, the world’s second-biggest oil user.
Although prices are set to fall for a second week amid concerns of the ongoing Sino-U.S. trade war is limiting overall economic activity.
Brent crude oil futures were trading at $79.51 per barrel at 0521 GMT, up 22 cents, or 0.3 per cent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 19 cents, or 0.3 per cent, at $68.84 a barrel.
For the week, Brent crude was 1.1 per cent lower while WTI futures were down 3.5 per cent, 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 per day (bpd) 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 gross domestic product expanding by only 6.5 per cent, missing estimates.
The weak economic data raised concerns that the country’s trade war with United States is beginning to have an impact on growth, which may limit China’s oil demand.
The trade war concerns combined with surging U.S. oil stockpiles reported on Thursday are capping the day’s price gains.
U.S. crude stocks last week climbed 6.5 million barrels, the fourth straight weekly build, almost triple the amount analysts had forecast, the U.S. Energy Information Administration said on Wednesday.
“EIA Weekly Petroleum Status Report was a complete shocker sending Oil markets spiraling 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 increased in October when compared to the previous month as buyers rush to lift more cargoes ahead of looming U.S. sanctions that kick in on Nov. 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 U.S. 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 Co (NITC) are expected to arrive at Dalian in October and November, the data showed.
Dalian typically receives between one million and three million barrels of Iranian oil each month according to data that dates back to January 2015.