|Published : 19 Oct 2016, 20:57:15|
Oil rises as Chinese output drops
LONDON, Oct 19 (Reuters): Oil rose by around 1.0 per cent on Wednesday, boosted by evidence of declining production in China and falling US inventories, while an upbeat OPEC statement on its planned output cut also supported the market.
A slightly weaker dollar reinforced the strength in oil as well, traders said, as it makes fuel purchases cheaper for countries using other currencies, potentially spurring demand.
Benchmark Brent crude futures were at $52.42 a barrel, up 74 cents on the day by 0922 GMT, while US West Texas Intermediate (WTI) crude oil futures were up 73 cents at $51.02 a barrel.
Saudi Arabian Energy Minister Khalid al-Falih said on Wednesday that oil markets were at the end of a considerable downturn as fundamentals were improving and supply and demand were rebalancing.
He called on non-OPEC producers to help stabilise the market saying their role was as critical as the role of OPEC members.
"Market forces are clearly working after a testing period of sub-$30 oil prices... Oil demand is expanding at a healthy rate despite slower global growth," he said.
As the world's largest exporters prepare to discuss the first cut in output in eight years next month, the pressure of persistently low oil prices on higher-cost producers is becoming apparent.
China's crude output fell 9.8 per cent to 3.89 million bpd, to near its lowest in six years in the second-biggest year-on-year decline on record.
"The fall in Chinese crude oil production is probably attributable to the low price level, which makes parts of production unprofitable. This makes it all the harder to understand why OPEC is talking prices up with its current debate about production cuts, and is thus helping precisely those oil producers it would ideally like to force out of the market," Commerzbank analysts.