By Justin Yang and Jenny W. Hsu
Crude futures advanced Monday morning in volatile trade, amid ongoing concerns that stockpiles will prove resilient to production cuts led by the global oil cartel.
Brent crude, the global oil benchmark, rose 0.2% to $49.02 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.2% at $46.63 a barrel.
Oil prices Monday morning bounced between gains and losses amid market expectations for a surplus in 2018. Forecasts for an inventory draw in the second half of 2017, however, have revived prices in the short term, said Bjarne Schieldrop, chief commodities analyst at SEB Markets.
In the first week of July, U.S. crude inventories fell more than seasonal norms. Meanwhile,the number of rigs drilling for oil in the U.S. rose by just two to 765 in the past week according to Baker Hughes Inc. That has helped oil prices jump back up throughout July, but a pessimistic view for the long-term still persists.
"The rebound is following limits, that's what we see today," Mr. Schieldrop said.
Still, signs of strong demand from China helped support oil prices.
China said Monday 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 comes as imports rose 14% to an average 8.5 million barrels a day, cementing China's position as the world's leading energy importer.
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 that will support the crude market as a global glut persists."Overnight, prices found support from data from China pointing to robust oil demand," Commerzbank said in a note.
Market players will be looking to 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 continuing production-curtailment pact.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--fell 0.2% to $1.56 a gallon. ICE gasoil changed hands at $448.75 a metric ton, up $1.00 from the previous settlement.
Write to Jenny W. Hsu at email@example.com
(END) Dow Jones Newswires
July 17, 2017 07:17 ET (11:17 GMT)
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