You are here: Home » Reuters » News
Business Standard

Oil rallies on Chinese import boost and Mideast tensions

Reuters  |  LONDON 

By Libby George

(Reuters) - prices firmed on Friday as bullish from strong Chinese to turmoil in the Middle East put Brent on track for a nearly 3 percent weekly gain.

The developments added to other signs that the market was finally rebalancing after years of excess, but analysts warned that the 2018 balance was still shaky.

Brent was at $57.20 at 1335 GMT, up 95 cents. U.S. West Texas Intermediate (WTI) crude was at $51.44 per barrel, up 84 cents from its last settlement.

The contracts were on track for weekly gains of more than 2 percent and 4 percent, respectively.

Chinese hit 9 million barrels per day (bpd) in September, data showed on Friday. averaged 8.5 million bpd between January and September, solidifying China's position as the world's biggest importer.

"We woke up with the strong data from China. That's on the supportive side," said Olivier Jakob, managing director of consultancy PetroMatrix.

China's huge have been strongly driven by purchases for its strategic petroleum reserves (SPR).

The nation has spent around $24 billion on building its crude reserves since 2015 and now holds around 850 million barrels of in inventory, according to the International Energy Agency (IEA).

Unrest in Iraq, and possible U.S. action on the Iran nuclear deal, also underpinned prices.

On Friday, local television reported that tens of thousands of Kurdish fighters had deployed in the Kirkuk region to confront possible "threats" from Iraqi forces.

Tensions between the two, which traders fear could impinge on exports from the region, have been building since Iraq's Kurds overwhelmingly backed independence in a Sept. 25 vote.

Later on Friday, U.S. President Donald Trump is expected to announce that he will not certify the 2015 Iran nuclear deal. The deal has to be re-certified every 90 days and is due for renewal on Sunday.

The step would give the U.S. Congress 60 days to decide whether to impose sanctions, but Iran's parliament speaker told the TASS agency that decertification would "be the end" of the deal and cause "chaos".

"U.S. sanctions could cut off a lot of Iranian trade finance," Jeff Brown, president of energy consultancy FGE, told this week.

Despite the bullish signals, analysts warned that the Organization of the Petroleum Exporting Countries needed to extend its agreement to reduce output beyond its current March 2018 expiry date in order to clear stocks.

OPEC, with other producers including Russia, has agreed to production cuts of 1.8 million bpd.

"OPEC-led cuts have breathed new life into bulls but unless the organisation digs deeper, the drawdown in stockpiles will soon fizzle out," broker PVM's Stephen Brennock wrote.

(Additional reporting by Henning Gloystein in Singapore; editing by Jason Neely and Adrian Croft)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, October 13 2017. 21:24 IST
RECOMMENDED FOR YOU