Disappearing Act Takes Oil to $70 While China Tops U.S. as Buyer

While futures are down 0.6 percent in New York, prices are near the highest in more than three years and set for a fourth weekly advance. Brent is holding on to its gains after briefly passing $70 a barrel on Thursday. An eight-week drop in U.S. crude stockpiles has helped boost prices, while China on Friday said it imported a record amount last year, making it the world’s biggest buyer.

Oil has continued to rally this year after posting a second annual advance as the Organization of Petroleum Exporting Countries and its allies curb supply to drain a worldwide glut. While the global market is balancing, there are still more than 100 million barrels that need to be cleared, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.

“Global oil market fundamentals have reached their healthiest state in several years,” Michael Tran, a commodities strategist with RBC Capital Markets in New York, wrote in a note. “While we anticipated a firm rebound in the second half of 2017, current price action has surpassed our expectations. We believe that it is premature to expect further upside to be sustainable, at least until the market gains a better grasp of the pace of U.S. production growth.”
West Texas Intermediate for February delivery was at $63.43 a barrel on the New York Mercantile Exchange, down 37 cents, at 3 p.m. in Hong Kong. Total volume traded was about 26 percent above the 100-day average. Prices are up 3.2 percent this week. WTI gained 23 cents to $63.80 on Thursday, the highest close since December 2014. Brent for March settlement lost 12 cents to $69.14 a barrel on the London-based ICE Futures Europe exchange after rising 6 cents on Thursday to the highest close in three years. Prices are up 2.3 percent this week. The global benchmark traded at a premium of $5.80 to March WTI.

U.S. crude stockpiles dropped to 419.5 million barrels last week, the lowest level since August 2015, according to the Energy Information Administration. Oil output fell by 290,000 barrels a day, the most since October.

Oil-market news:

  • China’s inbound oil shipments averaged about 8.43 million barrels a day in 2017, up about 10 percent from a year earlier, according to Bloomberg calculations using General Administration of Customs data.

Sources and photo-credits: Bloomberg