By Jenny W. Hsu
Crude futures were off to an upbeat start in Asia, adding to gains seen every day this week for benchmark prices.
Fresh bullish news on Monday included China saying its domestic daily crude production averaged some 4 million barrels a day in the first half of 2017, down 5.1% from a year earlier. That as imports rose 14% to an average 8.5 million, cementing China's position as the world's leading energy importer, and the country's economy growing a stronger-than-expected 6.9% in the second quarter.
Analysts say as long as oil prices stay relatively low, Chinese refineries will continue to buy in efforts to shore up its inventories.
China's growing oil demand is one of the most-important pillars to support the crude market as a global glut persists.
But there has been some signs that the supply side of the equation is poised to benefit prices. In the first week of July, U.S. crude inventories fell more than seasonal norms. And for last week, there was just a slight increase in the number of active U.S. oil-drilling rigs.
Moreover, a pipeline in Nigeria getting shut down over the weekend added to bull's optimism.
Investors are becoming "increasingly positive [of] the condition of the oil market," said ANZ Research. An increase in projected oil demand from the International Energy Agency also helped fuel near-5% price gains last week.
"We can see there are some encouraging changes," said Ric Spooner at CMC Markets. He said around 65% of that firm's clients are keeping a long view on the oil market, though many are still taking a wait-and-see position.
"Price is the swing factor here," added Mr. Spooner. "At $40, we will see more U.S. shale producers step on the brake, but they will step on the gas pedal once prices edge closer to $50."
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August recently traded up 0.2% at $46.64 a barrel in the Globex electronic session. September Brent crude on London's ICE Futures exchange rose 0.3% to $49.04. Nymex August reformulated gasoline blendstock up 0.1% $1.562 a gallon, diesel rose 0.3% to $1.52 and ICE gasoil added 0.6% to $450.25 a metric ton.
Near-term, market players will be eyeing weekly U.S. oil data to determine if the prolonged sub-$50 prices have triggered a deceleration in shale investment. Another highly watched event will be the gathering in Moscow next Monday where some delegates from the Organization of the Petroleum Exporting Countries will discuss adding Nigeria and Libya in the ongoing production-curtailment pact.
Write to Jenny W. Hsu at firstname.lastname@example.org
(END) Dow Jones Newswires
July 16, 2017 23:20 ET (03:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.