Oil futures rose slightly Thursday, with analysts tying support to data showing strong crude imports by China in October, though upside was expected to remain limited by perceptions of ample global supply.
West Texas Intermediate crude for December delivery CLZ8, -0.03% on the New York Mercantile Exchange was up 22 cents, or 0.4%, to $61.89 a barrel, a day after closing at a nearly eight-month low. January Brent crude LCOF9, -0.25% was up 17 cents, or 0.2%, at $72.24 a barrel.
Chinese government data showed the country imported 9.61 million barrels a day of crude in October, noted analysts at Commerzbank, after refinery processing had climbed to a record in September, pointing to increased demand for crude.
In addition, the selloff in crude last month may have been used by Chinese refineries to stock up on Iranian oil before U.S. sanctions began to bite, they said, noting Bloomberg data that showed Iranian oil shipments to China rose to 741,000 barrels a day last month — the second-highest level of the year.
Furthermore, the significantly lower prices in October may have been used by refineries to stock up, the analysts said, adding that Chinese refineries were also likely to have stocked up on Iranian oil before the U.S. sanctions began to bite. Citing data from Bloomberg, they said Iranian oil shipments to China increased to 741,000 barrels a day in October — their second-highest level this year.
Subsequently, the Trump administration this week granted waivers to eight countries, including China, from the renewed Iran sanctions.
While worries about the Iran sanctions had previously served to boost oil prices, an October swoon in part reflected expectations that increased output by Saudi Arabia and Russia would largely offset the lost barrels.
“While the focus was on the embargo against Iran and Venezuela’s output struggles over the past months, i.e. the risks of too little supply, the market increasingly looks concerned about the prospects of too much supply,” said Norbert Ruecker, head of macro and commodity research at Julius Baer, in a note.
“The petro-nations under the lead of Saudi Arabia and Russia have opened their taps, civil-war-torn Libya surprised with strong exports as of late, and the pipeline bottlenecks no longer seem to be too much of a temporary constraint for the U.S. shale boom,” he said.
The Energy Information Administration on Wednesday said U.S. crude inventories rose by a larger-than-expected 5.8 million barrels in the week ended Nov. 2, the seventh consecutive weekly rise.
In other energy trade, December gasoline RBZ8, +0.27% rose 0.5% to $1.655 a gallon, while December heating oil HOZ8, -0.83% fell 0.6% to $2.2234 a gallon.
December natural gas NGZ18, -1.38% was off 1.2% to $3.512 per million British thermal units.
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