Oil rises on surprise draw in US stocks, prospect of OPEC action

A pumpjack in Signal Hill, California. (AFP)
Updated 23 October 2019

Oil rises on surprise draw in US stocks, prospect of OPEC action

  • OPEC, allies to mull deeper production cuts
  • Weak demand growth outlook weighs on sentiment

HOUSTON: Oil rose above $60 a barrel on Wednesday after government data showed a surprise draw in US crude stocks and as the prospect of deeper output cuts by OPEC and its allies offered support.
US crude stocks fell by 1.7 million barrels last week as refineries hiked crude runs by 429,000 barrels per day (bpd), the Energy Information Administration said. Analysts had expected an increase in US inventories of 2.2 million barrels.
Brent crude futures were up 44 cents, or 0.74%, to $60.14 a barrel at 10:13 a.m. CDT . West Texas Intermediate (WTI) crude futures for December delivery were up 48 cents, or 0.88%, to $54.96 per barrel.
Oil prices had fallen earlier in the session on data from industry group the American Petroleum Institute showing US stocks rising more than analysts had expected, by 4.5 million barrels to 437 million barrels.
The US Energy Department’s report “has put some buyers in the market, but it will be interesting to see if it lasts. While this will distract from demand destruction, the market will eventually come back to it,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
The draw in US oil stocks appeared to have been caused by temporary market factors including higher refinery runs, rather than a fundamental firming of oil demand, and investors are still concerned about the global economy following reports of slowing growth in China and Europe, McGillian added.
A larger-than-expected decline in US gasoline stocks also supported prices, analysts said. Gasoline stocks fell by 3.1 million barrels, compared with analysts expectations of a 2.3 million-barrel drop.
“The continued decline in product inventory makes for a bullish report,” said John Kilduff, a partner at Again Capital LLC in New York. “Gasoline numbers are summer-like; that’s endemic of a good economy (in the US) and people driving to work.”
Also helping to underpin prices, the Organization of the Petroleum Exporting Countries is mulling whether to deepen production cuts amid concerns of weak demand growth next year.
OPEC and other oil producers including Russia, a group known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020. OPEC and other non-members are scheduled to meet again Dec. 5-6.
“With the headwinds of strong US producer hedging and high freight rates fading, we expect stronger Brent timespreads and higher prices in coming weeks, with upside risk to our year-end $62 per barrel forecast,” Goldman Sachs said in a note.
The investment bank expects Brent prices to continue trading around $60 a barrel in 2020.


Trump calls for World Bank to stop lending to China

Updated 07 December 2019

Trump calls for World Bank to stop lending to China

WASHINGTON: US President Donald Trump on Friday called for the World Bank to stop giving loans to China, one day after the institution adopted a lending plan to Beijing over Washington’s objections.
The World Bank on Thursday adopted a plan to aid China with $1 billion to $1.5 billion in low-interest loans annually through June 2025. The plan calls for lending to “gradually decline” from the previous five-year average of $1.8 billion.
“Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don’t, they create it. STOP!” Trump wrote in a post on Twitter.
Spokespeople for the White House and the World Bank did not immediately respond to requests for comment.
The World Bank loaned China $1.3 billion in the fiscal 2019 year, which ended on June 30, a decrease from around $2.4 billion in fiscal 2017.
But the fall in the World Bank’s loans to China is not swift enough for the Trump administration, which has argued that Beijing is too wealthy for international aid.