Oil Up For Third Straight Week As China Data Renews Confidence

Meanwhile, Russia debates whether to ban all exports to stabilize prices: File Image/Pixabay

Oil traders, who in the previous session caused prices to rise based on supply tightness concerns, on Friday caused gains for a third straight week based on optimism from a most unlikely source: China.

Brent settled up 23 cents, or 0.3 percent, at $93.93 per barrel, while West Texas Intermediate settled up 61 cents, or 0.7 percent, at $90.77 per barrel; both contracts gained about 4 percent on the week.

Better-than-expected industrial output and retail sales figures in China were said to have been the biggest influence for Friday's positive close: data showed that oil refinery processing in that country rose by nearly 20 percent from a year earlier, strongly suggesting that the worst of the downturn is over.

This was in addition to optimism over Saudi Arabia and Russia earlier this month announcing extensions of their combined supply cuts of 1.3 million barrels per day (bpd) to the end of this year, as well as expectations for lower U.S. oil output with producers having reduced drilling activity by nearly 20 percent from last year's peak.

Bloomberg on Friday noted that timespreads continue to signal a supply shortfall: "The gap between WTI's two nearest contracts reached 84 cents a barrel intraday in bullish backwardation, also the highest level since November."

However, Keshav Lohiya, founder of Oilytics, pointed out that "The crude market is now firmly in OPEC's hands as it's up to Saudi now when to start reversing some of these voluntary cuts."

In other oil related news on Friday, Farhat Bengdara, the chairman of Libya's National Oil Corporation, told media that the oil export terminals in eastern Libya continue to operate under normal conditions – despite that country's deadly flood that was estimated to have killed over 11,000 people.

The Ras Lanuf, Zueitina, Brega, and Es Sider ports reopened on Wednesday following their closure ahead of Storm Daniel.

Also, Russia's TASS new agency said on Friday that the former Soviet Union is once more debating whether to ban all crude oil product exports in order to stabilize volatile fuel prices in the country; the news came even as Gazprom's Astrakhan gas processing plant resumed gasoline output after maintenance work.