Oil prices rise for second day on strong demand from refineries in China, US stockpile drop

Oil prices rose for a second day on Wednesday on signs of strong demand from refineries in China, the world’s second-largest crude user, amid tightening supply as producers curtail output and as oil inventories in the United States fell unexpectedly

Reuters April 17, 2019 12:35:48 IST
Oil prices rise for second day on strong demand from refineries in China, US stockpile drop
  • Brent gained as much 0.5 percent to $72.08 a barrel, the highest since 8 November and the highest this year

  • The steady demand growth in China is occurring as a deal between OPEC and its allies, including Russia, to limit their output by 1.2 million bpd in 2019 has curtailed global supplies

  • Crude oil supply has also declined this year as the United States has imposed economic sanctions on OPEC members Venezuela and Iran

Seoul: Oil prices rose for a second day on Wednesday on signs of strong demand from refineries in China, the world’s second-largest crude user, amid tightening supply as producers curtail output and as oil inventories in the United States fell unexpectedly.

International benchmark Brent crude oil futures rose 27 cents, or 0.4 percent, to $71.99 a barrel by 0513 GMT. Brent gained as much 0.5 percent to $72.08 a barrel, the highest since 8 November and the highest this year.

U.S. West Texas Intermediate (WTI) crude futures were at $64.48 per barrel, up 43 cents, or 0.7 percent from their previous settlement.

“Crude oil futures edged up as market sentiments were buoyed by a surprise drawdown in U.S. crude oil inventories and tighter market fundamentals in the current term,” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.

China’s refinery throughput in March rose 3.2 percent from a year earlier to 53.04 million tonnes, or 12.49 million barrels per day (bpd), data from the National Bureau of Statistics showed on Wednesday. The data also showed its economy in the first quarter expanded by 6.4 percent compared to a year earlier.

Oil prices rise for second day on strong demand from refineries in China US stockpile drop

Represetational image. Reuters.

“The demand side of the equation got a substantial fillip via today’s China data suggesting prices will continue to move higher on improving global growth and risk sentiment,” said Stephen Innes, managing partner and head of trading at SPI Asset Management, in a note.

The steady demand growth in China is occurring as a deal between the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to limit their output by 1.2 million bpd in 2019 has curtailed global supplies.

Crude oil supply has also declined this year as the United States has imposed economic sanctions on OPEC members Venezuela and Iran.

The tightening supply and demand fundamentals have pushed WTI up more than 40 percent this year and Brent up by more than 30 percent.

In June, OPEC and its partners will decide whether to continue to curb their production, although concerns have arisen over Russia’s willingness to stick with the cuts.

Gazprom Neft, the oil arm of Russian gas company Gazprom, expected the global oil deal between OPEC and its allies to end in the first half of the year, a company official said on Tuesday.

“As the possibility of Russia ending the OPEC deal remains, that is capping further gains,” said Kim Kwang-rae, commodity analyst at Samsung Futures in Seoul.

An unexpected fall in U.S. crude inventories also supported higher oil prices.

U.S. crude inventories fell by 3.1 million barrels in the week ended 12 April to 452.7 million, compared with analysts’ expectations for an increase of 1.7 million barrels, according to data from the American Petroleum Institute (API) released on Tuesday.

Official data on U.S. inventories from the Energy Information Administration (EIA) is due to be released on Wednesday.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Donald Trump, Indian news channels and Bollywood: Notes on watching people say obnoxious things loudly
World

Donald Trump, Indian news channels and Bollywood: Notes on watching people say obnoxious things loudly

The job of the American president is not to entertain the world; he is not meant to be a clown. Similarly, and at a far smaller level of impact, it is not the job of TV news channels to keep viewers engrossed in the drama of what are essentially reality TV shows.

Donald Trump vows to win 3 Nov election by 'bigger' margin than 2016, seeks 'thundering defeat' for Joe Biden
World

Donald Trump vows to win 3 Nov election by 'bigger' margin than 2016, seeks 'thundering defeat' for Joe Biden

The US president claimed that if Biden and his running mate Senator Kamala Harris are elected, they will convert the US into a socialist country

Melania Trump says son Barron tested positive for coronavirus, but experienced no symptoms
World

Melania Trump says son Barron tested positive for coronavirus, but experienced no symptoms

Donald Trump used his son’s quick recovery as a pitch to reopen schools, downplaying the infection's severity by saying that Barron didn't realise he had contracted COVID