Summary
- U.S. crude stocks rose more than expected last week
- Private reports suggest U.S. labour market weakened in October
- Gunvor withdraws proposal to buy Lukoil’s overseas assets
(Reuters) – Oil prices rose on Friday but remained on track for a second consecutive weekly loss after three days of declines on worries about excess supply and slowing U.S. demand.
Brent crude futures rose 50 cents, or 0.8%, to $63.88 a barrel by 1243 GMT. U.S. West Texas Intermediate crude was up 51 cents, or 0.9%, at $59.94.
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“The market continues to weigh a rising oil surplus against mixed macro,” said SEB analyst Ole Hvalbye.
An unexpected U.S. inventory build of 5.2 million barrels reignited oversupply fears this week, said IG Markets analyst Tony Sycamore.
U.S. crude stocks rose more than expected on higher imports and reduced refining activity while gasoline and distillate inventories declined, the Energy Information Administration said on Wednesday.
Concern over the effects of the longest government shutdown in U.S. history also pressured oil prices.
The Trump administration has ordered flight reductions at major airports because of a shortage of air traffic controllers while private reports are pointing to a weaker U.S. labour market in October.
The Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, decided on Sunday to increase output slightly in December. However, the group also paused further increases for the first quarter of next year, wary of a supply glut.
The well-supplied market prompted Saudi Arabia, the world’s top oil exporter, to announce a sharp reduction to prices for its crude for Asian buyers in December.
European and U.S. sanctions on Russia and Iran, meanwhile, are disrupting supplies to the world’s largest importers, China and India, providing some support for global markets.
China’s crude imports in October rose 2.3% from September and were up 8.2% from a year earlier at 48.36 million tons, customs data showed, against a backdrop of high utilisation rates at refineries in the world’s largest oil importer.
“China kept importing elevated amounts of crude in October,” UBS analyst Giovanni Staunovo said. “That move keeps those barrels away from the OECD, where inventories remain low.”
Swiss commodities trader Gunvor said on Thursday that it had withdrawn its proposal to buy the foreign assets of Russian energy company Lukoil after the U.S. Treasury called it Russia’s “puppet” and signalled that Washington opposed the deal.
“Gunvor scrapping its Lukoil assets purchase suggests the U.S. is maintaining its maximum pressure campaign against Russia, and potential strict enforcement of sanctions on Rosneft and Lukoil,” said Vandana Hari at oil market analysis provider Vanda Insights.
Reporting by Stephanie Kelly in London, Mohi Narayan in New Delhi and Florence Tan in Singapore Editing by David Goodman
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