Oil prices were up again this morning following gains over the Asian session on news of record Chinese demand. Pre-market in London Brent crude was at $54.45 a barrel having gained 29 cents, while WTI reached $51.45 through an 8 cents gain.
China today released figures on 2016 GDP growth which showed Q4 growth had come in a 6.8%, slightly ahead of forecasts for 6.7%. The rate for the whole year was 6.7%, which while down on 2015’s 6.9% was within the government’s 6.5%-7% target range. Forecasts had been for 6.7%. China’s steady economy led to record high demand for oil and the country’s December refinery runs grew by 3.7% to 11.26 million bpd. Crude throughput was at 10.79 million bpd, a record high.
The downside for oil prices came in yesterday’s data releases by the U.S. Energy Information Administration. Crude and gasoline inventories rose last week with weak demand for gasoline and refineries scaling back production. Expectations for a rise in crude inventories of 242,000 barrels were exceeded significantly, with the actual figure 2.3 million barrels.
Noises continued to come out of OPEC this week reassuring world markets that agreed output cuts would be strictly adhered to. Despite the rebound over the past couple of days both Brent crude and WTI futures are set to record a second successive weak of overall losses as early new year optimism on how quickly and sustainably global supply levels can be rebalanced is tempered. The main threat as to whether OPEC cuts will lead to their intended outcome is considered to be rising shale oil output from the U.S.
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