Oil Rises on Strong China Demand, Supply Cuts

By Adedapo Adesanya

Oil rose on Friday and posted a weekly gain as higher Chinese demand and supply cuts from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) lifted prices.

Brent crude gained 94 cents to settle at $76.61 a barrel, while the US West Texas Intermediate (WTI) crude rose $1.16 to $71.78 per barrel.

On a week-on-week basis, Brent appreciated by 2.4 per cent, and WTI improved by 2.3 per cent.

Oil has gained this week on hopes of growing Chinese demand. China’s refinery throughput rose in May to its second-highest total on record.

There are also expectations that Chinese demand to keep climbing during the second half.

Kuwait Petroleum Corporation (KPC) sees continued good demand for oil from China in the second half of the year, according to its chief executive, Sheikh Nawaf Saud al-Sabah.

Kuwait, an OPEC producer, has been boosting oil product exports to Europe, Africa, Asia and the Americas after the sanctions on Russia reshuffled energy trade routes.

Also supporting crude are the voluntary output cuts implemented in May by OPEC+, plus an additional cut by Saudi Arabia in July.

Meanwhile, Russian Energy Minister Nikolai Shulginov said it was “realistic” to reach oil prices of around $80 per barrel.

He also said Russian oil and gas condensate production is expected to fall by around 20 million tonnes (400,000 barrels per day) this year, reiterating the country’s expectations.

Another OPEC member, Iran, saw its crude exports and oil output hit new highs in 2023 despite sanctions from the United States.

Capping oil price gains was the prospect of rising interest rates, which could slow economic growth.

The Bank of England is set to raise interest rates by a quarter of a percentage point next week. The European Central Bank lifted rates to a 22-year high on Thursday, and the US Federal Reserve signalled at least a half of a percentage point increase by year-end.

Oil rigs in the US fell by four to 552 this week, their lowest since April 2022, while gas rigs fell by five to 130, their lowest since March 2022, energy services firm Baker Hughes Co. said.