Higher profit from Chinese industries buoys oil price

London — Oil prices rose on Friday, hitting three-month highs. Confidence in global growth has been restored by upbeat economic data from China and an indication from the US of an end to the trade war between Washington and Beijing.

Brent crude was up 29c, or 0.4%, at $68.21 a barrel at 0903 GMT. West Texas Intermediate (WTI) was up 24c, or 0.4%, at $61.92 a barrel. The volume of trade remained thin.

Data on Friday showed profits at China’s industrial firms rose at the fastest pace in eight months in November. The chemical, petroleum processing and steel industries reported recovering profits in November because of rebounding market demand and rising prices amid easing trade hostilities with Washington.

China and the US cooled their 17-month trade war earlier in December, announcing a phase-1 agreement that would reduce some US tariffs in exchange for more Chinese purchases of American farm products.

But the lingering effect of the trade row showed up in data from Japan, the world’s third-biggest economy, on Friday as industrial output shrank for a second month in November.

In the US, a survey on Thursday showed that online holiday purchases by US consumers reached a record, beating analysts’ expectations and sending US stocks to fresh highs.

US consumers are “showing few signs of tightening their purse strings, which is positive for oil”, said Stephen Innes chief Asia market strategist at AxiTrader.

US crude oil stockpiles probably declined last week, while inventories of petrol are set to extend their build-up for the seventh consecutive week, an extended Reuters poll showed on Thursday.

The latest poll was conducted ahead of the weekly status report from the Energy Information Administration (EIA), an agency of the US department of energy. The EIA report is due on Friday after being delayed by two days by Christmas. 

The price of Brent has jumped more than a quarter in 2019, while WTI is up about 35%, boosted by moves by Opec and other producers (Opec+) to curb production.

Opec+ in December decided to prolong its oil output restriction deal until the end of March and to deepen the cuts to balance out the oil market.

Russian energy minister Alexander Novak said on Friday that Opec+ may consider wrapping up their oil output reduction in 2020.

Reuters

Source: businesslive.co.za