Oil prices rose on Friday, helped by rising Chinese crude demand and threats of a strike in Africa’s largest oil exporter, but U.S. crude still posted its biggest weekly loss in two months. But prices were still on track for their second straight weekly loss amid concerns that rising U.S. production would undermine OPEC-led supply cuts aimed at curbing a glut.
Crude futures ended Friday’s session 67 cents, or 1.2 percent, higher at $57.36 a barrel. The contract fell 1.7 percent on the week. Brent Crude, the international benchmark for oil prices, was up $1.25, or 2 percent, at $63.45 a barrel by 2:26 p.m. ET (1926 GMT), but still heading for a weekly slide.
China’s crude oil imports rose to 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed on Friday. “We have good numbers out of China,” said John Macaluso, an analyst at Tyche Capital Advisors. “A lot of the extra imports are not from Saudi Arabia. Iran, Russia and the U.S. are some of the countries picking up the slack.” Booming demand will push China ahead of the United States as the world’s biggest crude importer this year. U.S. investment bank Jefferies forecast 2018 global oil demand growth of 1.5 million bpd, driven by almost 10 percent demand growth in China.
“Generally speaking, the market is looking more healthy than sick,” said Tamas Varga, analyst with PVM Oil Associates. Varga said threats of a strike later this month from a union in Nigeria, Africa’s largest oil exporter, was supportive, as was reduced flow along the Britain’s Forties oil pipeline, one of the grades that sets Brent prices. But U.S. oil production growth has threatened to undermine production cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers. The group has agreed to extend the pact to the end of 2018. The voluntary output cuts pushed oil prices higher between June and October, with Brent gaining around 40 percent. “Even if you have no bullish view … OPEC and Russia have taken away the risk to the downside,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding it was unlikely that Brent would drop below $61 per barrel.
Still, data this week showed that U.S. crude output had risen 25,000 bpd to 9.7 million bpd in the week to Dec. 1, the highest production since the 1970s and close to the production levels of Russia and Saudi Arabia. This week’s U.S. rig count, an early indicator of future output, ticked up by two oil rigs to a total of 751, oilfield services firm Baker Hughes reported on Friday.
