December 8, 2017 by Grant Smith
Oil rose, paring a second weekly loss, as strong Chinese crude imports allayed concerns that U.S. markets may remain oversupplied.
Futures climbed 1.4 percent in New York, paring this week’s loss to 1.5 percent. China’s crude oil imports rebounded from a one-year low to near a record amid signs the nation’s commercial stockpiles shrank by the most in almost eight years. U.S. crude output increased to a record last week, while motor fuel inventories rose more than double analysts’ forecasts, government data showed Wednesday.
Oil has averaged about $54 a barrel this quarter, the highest in more than two years as the Organization of Petroleum Exporting Countries and its allies agreed to extend output curbs until the end of 2018. Chevron Corp. will ramp up investment in the U.S. Permian Basin and other shale fields next year while reducing spending elsewhere, according to a statement Thursday.
“A recovery in Chinese imports is probably settling a few nerves,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. Overall, “the focus is switching back from the OPEC-cut extension, to U.S. stocks, production and rig count.”
West Texas Intermediate for January delivery was at $57.46 a barrel on the New York Mercantile Exchange, up 77 cents, at 12:18 p.m. in London. Total volume traded was about 5 percent below the 100-day average. Prices gained 73 cents, or 1.3 percent, to $56.69 on Thursday.
Brent for February settlement rose 82 cents to $63.02 a barrel on the London-based ICE Futures Europe exchange after climbing 1.6 percent on Thursday. Prices are down 1 percent this week. The global benchmark traded at a premium of $5.48 to February WTI.
U.S. crude production expanded for a seventh week to 9.7 million barrels a day, the highest level in weekly data compiled by the Energy Information Administration since 1983. Gasoline inventories rose by 6.78 million barrels last week, the biggest gain since January.
Kuwait sees the oil market re-balancing by the third quarter of 2018, state-run Kuna news agency said, citing the nation’s oil minister. Nigeria’s white-collar union for oil and gas workers, Pengassan, may begin an indefinite strike on Dec. 18 over “unfair labor practices.” BP Plc will focus on drilling new wells near its existing offshore platforms in the Gulf of Mexico and the North Sea next year, part of a plan to only build projects that meet its targeted returns at $50 a barrel. With Sinopec’s recent legal action representing “a watershed moment” in the Venezuelan debt crisis, the risk of potential default “happening sooner rather than later” is increasing substantially, FGE wrote in a note.