Oil prices rise after jump in crude imports to China
London (Apr 21) Oil prices rose in volatile trade on Thursday, as investors digested data showing China’s oil imports jumped last month while crude stockpiles continued to increase in the U.S.
Brent crude LCOM6, +0.17% the global oil benchmark, rose 11 cents, or 0.2% to $45.90 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLM6, -0.02% were trading up 3 cents to $44.22 a barrel.
China’s crude imports in March were the second-highest on record, helping to allay fears that demand from the world’s second-biggest oil consumer is slowing.
China’s government said Thursday that crude-oil imports in March were up 21.6% from a year earlier at around 7.7 million barrels a day. The near-record imports were underpinned by strong demand from government stockpiling and local refineries that are eager to take advantage of the low prices.
Read: How to make sense out of a confusing rally for oil futures
In the U.S., data on Wednesday showed that stockpiles of crude increased last week by 2.1 million barrels and continued to hover near record highs. However, the Energy Information Administration also said U.S. production of crude fell for the sixth straight week to 8.95 million barrels. Last April, U.S. output peaked at 9.7 million barrels a day.
“The dwindling U.S. oil production will ensure that the oversupply is noticeably reduced in the second half of the year and that the oil market will be balanced by next year at the latest,” analysts at Commerzbank said in a report.
Falling U.S. output will add to declines from producers outside the Organization of the Petroleum Exporting Countries this year. Non-OPEC production is expected to fall by 700,000 barrels a day in 2016, the largest annual decline since 1992, the International Energy Agency estimates.
“Low oil prices have started to put a brake on non-OPEC producers, U.S. [shale] oil in particular,” Fatih Birol, the agency’s executive director, said in a speech Thursday.
Persistent oversupply has dragged oil prices down for nearly two years, but signs of declining production have stoked a more upbeat sentiment in recent weeks. Prices edged higher even after a group of key OPEC and non-OPEC producers failed to clinch an output freeze agreement at talks in Doha on Sunday.
Read: OPEC secretary-general says cartel may discuss oil freeze at June meeting
“The failure of the Doha talks has moved surprisingly quickly into the background. The oil market is seemingly caught in a positive mood, dismissing the persisting supply glut,” said Norbert Ruecker, head of commodities research at Julius Baer.
Later on Thursday, market watchers will be focusing on the European Central Bank’s policy meeting later Thursday. The central bank is widely expected to hold interests steady at record lows.
Read: ECB’s Draghi could be in for a grilling over ‘helicopter money’
Nymex reformulated gasoline blendstock for May RBK6, +0.61% — the benchmark gasoline contract — rose 0.7% to $1.52 a gallon.
Source: MarketWatch
