Quantcast

Oil prices rise on strong China demand, signs of US output slowdown


Reuters

UPDATE 2-Oil prices rise on strong China demand, signs of US output slowdown


* U.S. drilling growth slows, but rig count still high
    * China's refiners process near record amounts of crude oil

 (Adds comment, chart; updates prices)
    By Henning GloysteinSINGAPORE, July 17 (Reuters) - Oil prices rose on Monday,
supported by a slowdown in the growth of rigs looking for crude
in the United States and because of strong refinery demand from
China.
    Brent crude futures <LCOc1> were at $49.10 per barrel at
0454 GMT, up 18 cents, or 0.4 percent, from their last close.
    U.S. West Texas Intermediate (WTI) crude futures <CLc1> were
at $46.70 per barrel, up 16 cents, or 0.3 percent.
    Both benchmarks extended gains from strong performances last
week. [nL4N1K51WP]
    Analysts said the rising prices were a result of strong
demand as well as signs that a relentless climb in U.S. oil
production was slowing.
    "The slowing pace of increases combined with massive
drawdowns last week on both official crude inventory numbers
from the U.S. probably explains the positive sentiment in
general at the moment," said Jeffrey Halley of futures brokerage
OANDA in Singapore.
    U.S. drillers added two oil rigs in the week to July 14,
bringing the total to 765, Baker Hughes <BHGE.N> said on Friday.
<RIG-OL-USA-BHI>
    While that is the highest level since April 2015, the rate
of additions has slowed. New rigs over the past four weeks
averaged five, the lowest since November 2016.
    "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," said
U.S. bank Goldman Sachs.
    In Asia, China's refinery activity indicates strong fuel
demand.
    Chinese refineries increased crude throughput in June to the
second highest on record, with some independent plants raising
output even as state oil majors prepare to take drastic steps to
cut production during the peak summer season.
    Throughput last month hit 46.08 million tonnes, or 11.21
million barrels per day (bpd), a 2.3-percent rise 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. [nL3N1K81F8]
    Some analysts cautioned against too much optimism. "These
factors (China data and slowing U.S. drilling) would act more to
put a bottom in place for oil prices rather than spurring growth
to new highs," said Sukrit Vijayakar, director of energy
consultancy Trifecta.
    Brent is at similar levels as its average price since 2015,
Thomson Reuters Eikon data shows. Most price changes since 2015
have occurred in the first half, or towards the end, of a year.
Overall, the second halves of every year since 2015 have seen
relatively little price movement.


    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Brent crude oil futures    http://reut.rs/2uzdLNW
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Henning Gloystein; Editing by Joseph Radford and
Tom Hogue)
 ((henning.gloystein@thomsonreuters.com; +65 6870 3263; Reuters
Messaging: henning.gloystein.thomsonreuters.com@reuters.net))

Keywords: GLOBAL OIL/ (UPDATE 2)



This article appears in: Stocks , World Markets , Oil , Commodities
Referenced Symbols: BHGE


More from Reuters

Subscribe






See headlines for BHGE









Research Brokers before you trade

Want to trade FX?