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Oil prices rise on strong Chinese imports, Opec-led production cuts
[SINGAPORE] Oil prices edged up on Friday, supported by strong Chinese crude imports and Opec-led production cuts, although ample US fuel inventories still weighed on the market.
Brent crude futures, the international benchmark for oil prices, were trading at US$55.68 per barrel at 0807 GMT, up 5 US cents from their previous close.
US West Texas Intermediate (WTI) crude futures were up 3 US cents at US$53.03 a barrel.
Traders said that strong Chinese crude import data was supporting prices on Friday.
China's crude imports in January rose 27.5 per cent from a year earlier to the third-highest volume ever, suggesting robust demand despite disruptions from the Lunar New Year holiday.
China imported 34.03 million tonnes, or 8.01 million barrels per day (bpd), the General Administration of Customs reported on Friday. The imports were down from December's record 8.57 million bpd.
Despite this, both crude futures have traded within a US$5 range since December, and this was due to competing price drivers. "We have been stuck around US$55 per bbl since the beginning of December, and I don't really see what is going to cause us to break out of this range," said Matt Stanley, a fuel broker at Freight Investor Services (FIS) in Dubai.
"The push and pull between competing forces in the crude oil market continued overnight. Despite the stronger US dollar and lingering concerns about US (oil) inventories, traders returned their focus to the Opec production cuts being implemented at the moment," ANZ bank said.
The Organization of the Petroleum Exporting Countries (Opec) and other producers including Russia have agreed to cut output by almost 1.8 million barrels per day during the first half of 2017 to rein in a global fuel supply overhang.
Initially, there was widespread scepticism that all producers would actually make the promised cuts, but compliance with the announced reductions is now estimated to be between 80 and 90 per cent as Opec's de-facto leader Saudi Arabia has enforced deep production cuts.
The next Opec data is due to be released next week.
Despite the Opec-led cuts, oil markets remain bloated as inventories, especially in the United States, are brimming and rising US drilling activity is pushing up production there as well.
As a result, WTI and Brent crude oil futures are between 4 to 5 per cent below their early January peaks.