Oil steadies on firm China request, signs of slowdown in US stocks’ growth
SINGAPORE: Oil prices build up on Monday, supported by a slowdown in the growth of stocks looking for crude in the United States and because of strong refinery demand from China.
From their last close, Brent crude futures, the international benchmark for oil prices, were at $49.04 per barrel at 0353 GMT, up 13 cents, or 0.3 percent.
U.S. West Texas Intermediate (WTI) crude futures were at $46.64 per barrel, up 10 cents, or 0.2 percent.
Both crudes extended obtains from strong performances last week.
Traders and analysts said that the soaring prices were the result of strong demand as well as signs that a constant climb in U.S. oil production was slowing down.
Senior market analyst at futures brokerage OANDA in Singapore, Jeffrey Halley said, “The slowing pace of increases combined with massive draw downs last week on both official crude inventory numbers from the U.S. probably explains the positive sentiment in general at the moment.”
ANZ bank said on Monday, “Last week’s strong draw on U.S. oil inventories was supported by comments from the IEA that demand is growing stronger than they had initially estimated.”
It added, “The relentless climb in drill rigs operating in the U.S. also subsided.”
Energy services firm, Baker Hughes said on Friday that U.S. drillers added two oil stocks in the week to July 14, bringing the total count up to 765.
While that is the highest level since April 2015, the rate of those additions has slowed. Rig additions over the past four weeks averaged five, the lowest since November 2016.
U.S. bank’s Goldman Sachs said, “Given the usual time lag between price signal and drilling decision, the coming month, which also features the E&P (exploration and production) earning season, will be key.”
In Asia, China’s refinery activity continues to designate strong fuel demand.
Chinese oil refineries increased throughput in June to the second highest on record, with some independent plants raising output even as state oil majors construct to take extreme steps to cut production during the highest summer season.
Throughput last month hit 46.08 million tonnes, or 11.21 million barrels per day (bpd), a 2.3-percent climb from a year ago and up from May’s 10.98 million bpd, data from the National Bureau of Statistics (NBS) showed on Monday.
The number was just short of December’s record high of 11.26 million bpd.