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Oil rises nearly 2% on China demand, but weekly losses loom
[NEW YORK] Oil prices rose almost 2 per cent on Friday, helped by rising Chinese crude demand and threats of a strike in Africa's largest oil exporter.
But US prices fell 1.7 per cent on the week and Brent prices fell 0.5 per cent amid concerns that rising US production could undermine Opec-led supply cuts.
Brent crude settled up US$1.20 or 1.9 per cent at US$63.40 a barrel.
US West Texas Intermediate (WTI) crude settled up US$57.36 a barrel, up 67 cents or 1.2 per cent.
China's crude oil imports rose to 9.01 million barrels per day (bpd), the second highest on record, data from the General Administration of Customs showed.
"We have good numbers out of China," said John Macaluso, an analyst at Tyche Capital Advisors. "A lot of the extra imports are not from Saudi Arabia. Iran, Russia and the US are some of the countries picking up the slack."
Booming demand will push China ahead of the United States as the world's biggest crude importer this year.
US investment bank Jefferies forecast 2018 global oil demand growth of 1.5 million bpd, driven by almost 10 per cent demand growth in China.
"Generally speaking, the market is looking more healthy than sick," said Tamas Varga, analyst with PVM Oil Associates.
Mr Varga said the threat of a strike later this month from a union in Nigeria, Africa's largest oil exporter, was supportive.
An extension to the end of 2018 of production cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers underpinned the market.
The output cuts pushed oil prices higher between June and October, with Brent gaining around 40 per cent.
"Even if you have no bullish view ... Opec and Russia have taken away the risk to the downside," said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding it was unlikely that Brent would drop below US$61 per barrel.
Still, data this week showed that US crude output had risen 25,000 bpd to 9.7 million bpd in the week to Dec 1, the highest production since the 1970s and close to the production levels of Russia and Saudi Arabia.
US energy companies this week added oil rigs for a third week in a row, the longest string of increases since summer, as higher crude prices prompted drillers to return to the well pad after a break in the autumn.
Drillers added two oil rigs in the week to Dec 8, bringing the total count up to 751, the highest level since September, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.
Hedge funds and money managers cut their bullish bets on US crude in the week to Dec 5, the US Commodity Futures Trading Commission (CFTC) said on Friday on fears of higher US production.