Oil prices have risen on signs of surging demand in China, the world’s number two oil consumer, although prices were headed for a second weekly decline on swelling US inventories and concern that trade wars were curbing economic activity.
Brent crude futures rose 49 cents to settle at $US79.78 a barrel. West Texas Intermediate crude futures rose 47 cents to settle at $US69.12 a barrel.
For the week, Brent fell 0.9 per cent, while US crude lost 3.1 per cent.
Both contracts have fallen around $US7 a barrel below four-year highs reached in early October.
WTI’s discount to Brent widened to its most since June 8, hitting $US11 a barrel.
Refinery throughput in China, the world’s largest oil importer, rose in September to a record 12.49 million barrels per day, government data showed.
The data fed hopes about oil demand in China, even though economic growth slowed in the third quarter to its weakest since the global financial crisis.
An OPEC and non-OPEC monitoring committee found that oil producers’ compliance with a supply-reduction agreement fell to 111 per cent in September from 129 per cent in August, three sources familiar with the matter said.
The Organisation of the Petroleum Exporting Countries has led cuts from major oil producers since 2017 to shore up prices.
‘OPEC and non-OPEC production increases have not quite equalled the loss in Iranian supply, giving the market concern about whether or not they will be able to fulfill the shortfall,’ said Andrew Lipow, president of Lipow Oil Associates.
The market has been focused on US sanctions on Iran, which take effect on November 4 and are designed to cut crude exports from the country.
Pressuring prices this week was US government data showing crude inventories last week climbed 6.5 million barrels, a fourth straight weekly build and almost triple the amount analysts had forecast.
Rising supplies, particularly at Cushing, Oklahoma, the delivery hub for WTI, pushed the market into contango, in which nearby prices trade lower than forward prices.
This happened on Thursday for the first time since May 22.
On Friday, front-month US crude futures traded at the biggest discount to the second month in nearly a year.
Traders anticipated further inventory builds in Cushing as new pipelines come online.
The US oil drilling rig count, an early indicator of future output, rose by four to 873 this week, the highest since March 2015, General Electric Co’s Baker Hughes energy services firm said on Friday.
Money managers cut net long US crude futures and options positions in New York and London by 37,080 contracts to 259,375 in the week to October 16, the US Commodity Futures Trading Commission said on Friday – the lowest level since September 19, 2017.