Oil is up but on track for a weekly loss as inventories grow

London — Oil prices rose on Friday on signs of surging demand in China, the world’s second-biggest oil consumer, although the market was heading for a second week of losses on concern that trade wars were curbing economic activity, as well as rising US inventories.

Benchmark Brent crude oil was up 20c a barrel at $79.49 by 7.40am GMT. US light crude was 15c higher at $68.80. For the week, Brent crude was 1% lower while US crude was down 3.5%, both on track for a second consecutive weekly decline.

Refinery throughput in China, the world’s largest oil importer, rose to a record high of 12.49-million barrels per day (bpd) in September as some independent plants restarted operations after prolonged shutdowns over the summer to shore up inventories, government data showed on Friday.

China’s refinery consumption may now be rising as several state-owned refiners return to service after maintenance.

Undermining sentiment were official figures showing China’s economic growth slowed in the third quarter to its weakest pace since the global financial crisis, with GDP expanding by only 6.5%, missing estimates. The data raised concerns that China’s trade war with the US was beginning to affect growth, which may limit oil demand.

Also denting confidence was evidence this week that US oil inventories had risen sharply. US crude stocks last week climbed 6.5-million barrels, marking a fourth straight weekly build and almost triple the amount analysts had forecast, the US Energy Information Administration (EIA) said on Wednesday.

“The EIA weekly petroleum status report was a complete shocker, sending oil markets spiraling lower amid some concerning development for oil bulls,” said Stephen Innes, head of trading APAC at Oanda in Singapore.

Inventories rose sharply even as US crude production slipped 300,000 barrels per day (bpd) to 10.9-million bpd last week due to the effects of offshore facilities closing temporarily for Hurricane Michael.

Meanwhile, Iranian oil exports may have risen in October as buyers took cargoes before US sanctions on Tehran take effect from November 4.

An unprecedented volume of Iranian crude oil is set to arrive at China’s north-east port of Dalian this month and in early November before then, according to an Iranian shipping source and data on Refinitiv Eikon.

Reuters