Oil prices ride choppy market Friday
Oil prices rose slightly in seesaw trading on Friday after data showed increasing Chinese demand for crude, but gains were offset by high global stocks and economic growth concerns.
Brent and US WTI contracts were both on track for weekly gains, but the two bounced between intraday gains to losses.
Brent crude futures were up 54 cents to $48.96/barrel by 12:32 EDT and US WTI crude futures were up 55 cents to $46.63.
“I think the big driver is inventory numbers,” Stewart Glickman, head of energy research at CFRA Research told Reuters, “We’ve finally broken below 500 million barrels, I feel like it’s a psychological barrier.”
According to Reuters, both contracts were up about 5 per cent above the week’s lows and were boosted by data from the International Energy Agency showing increasing demand for crude in China and decreasing crude stocks in the US.
The IEA reported crude imports in China were up 13.8 per cent in the first six months of 2017 over the same period in 2016. Amid the soaring demand, Asian traders are now selling oil products out of tanks and the US Energy Information Administration reported the largest drop of US crude inventories in 10 months earlier this week.
Commerzbank analysts took an upbeat tone, saying a reduction in the developed world’s crude stocks will likely continue “so long OPEC does not significantly increase its output any further”.
Crude stocks still sit above the five-year average and prices are over 16 per cent below highs reached earlier in the year.
OPEC producers Nigeria and Libya continue to boost their output and remain exempt from the OPEC supply cut pact and, according to the IEA, June compliance among participants in the cartel’s agreement fell to 78 per cent.
“It’s not too long before the market starts looking at the supply situation … which is anything but encouraging,” PVM Oil Associates analyst Tamas Varga told Reuters.
