Oil futures traded higher Friday, looking to score a third gain in row, with support tied to progress toward deals on U.S.-China trade and Brexit, as well as a weekly fall in U.S. inventories.
Prices, however, held on to a loss for the week on the back of downbeat economic data from China and a fifth consecutive weekly rise in U.S. crude inventories.
“Oil prices have stabilised over the past couple of weeks,” said Fawad Razaqzada, technical analyst at Forex.com.
“During this period, we have also seen equity prices rise noticeably as a result of optimism over the US-China trade situation and Brexit,” Razaqzada said in a note. “So, the gains can be partially explained away by improved risk appetite as a trade deal is seen as being positive for the Chinese and global economies, and in turn demand for oil.”
West Texas Intermediate crude for November delivery
rose 36 cents, or 0.7%, to $54.29 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 0.8% weekly decline. The global benchmark, as measured by December Brent crude
was up 10 cents, or 0.2%, at $60.01 a barrel, off 0.8% for the week.
Crude futures were building on gains scored the previous session despite the Energy Information Administration released Thursday showing a larger-than-expected rise in crude stocks last week of 9.3 million barrels, though a fall in refinery activity led to a strong draw on gasoline and distillate inventories, which fell 2.6 million barrels and 3.8 million barrels, respectively.
“Significantly lower U.S. product stocks played their part in the price rise, while the solid increase in crude oil stocks was ignored,” said Carsten Fritsch, analyst at Commerzbank, in a note.
However, Razaqzada warned that “further sharp increases in crude stocks, if seen, may keep price gains [for oil] in check, although ongoing intervention from the OPEC+ group means the downside will be limited as well.”
“So, overall, we are talking about a rangebound market, but with prices being near the range lows, the probability of a several-dollar rally has now increased,” he said.
Prices got a boost late in Thursday’s trading session after news that the U.S. and Turkey reached a case-fire pact in Syria, temporarily easing Middle East tensions. A tentative Brexit deal, meanwhile, fueled appetite for asset perceived as risky, though the deal must still be approved by the British parliament and other EU member states.
Meanwhile, U.S. data showed China’s crude-oil processing activity surged 9.4% year-over-year in September to a record 13.75 million barrels a day, Fritsch noted, up 1 million barrels a day from August.
Oil gains also came despite data showing slower-than-expected growth by China’s economy. Gross domestic product expanded at a 6% pace in the third quarter, the slowest in 27 years.
Back on Nymex, November gasoline
was up 0.4% at $1.6292 a gallon, poised for a weekly loss of 0.6%, while November heating oil
rose 0.4% to $1.9556 a gallon, down 0.1% for the week.
November natural gas
edged up 0.4% at $2.329 per million British thermal units, looking at a weekly rise of more than 5%.