Oil steady as sluggish China growth offsets trade deal optimism


SINGAPORE/TOKYO: Oil prices were steady on Friday as reports of sluggish economic growth in China, the world’s biggest crude importer, raised concerns about fuel demand which countered optimism from the signing of a Sino-U.S. trade deal this week. The world’s second-largest economy grew by 6.1% in 2019, its slowest expansion in 29 years, government data showed on Friday.
“A well-expected fourth-quarter China GDP rate (6%) provided little clue for oil price trading on Friday morning, and mounting downward economic pressure will perhaps limit oil’s upside in the mid- to long-term,” said Margaret Yang, market analyst at CMC Markets.
Brent crude futures LCOc1 were up 12 cents to $64.74 by 0735 GMT, after gaining nearly 1% on Thursday.
U.S. West Texas Intermediate futures CLc1 were up 11 cents at $58.63 a barrel, having risen more than 1% in the previous session.
Oil rose on Thursday after China and the United States signed their Phase 1 trade accord.
The mood was further boosted after the U.S. Senate approved changes to the U.S.-Mexico-Canada Free Trade Agreement.
Surging Chinese demand as seen in refinery throughput figures offset the less positive economic growth data.
In 2019, Chinese refineries processed 651.98 million tonnes of crude oil, equal to a record high 13.04 million barrels per day, and up 7.6% from 2018, government data showed. Throughput also set a monthly record for December.
The International Energy Agency offered a dim view of the oil market outlook for 2020 on Thursday.
OPEC supply will exceed demand for its crude, the IEA forecast, even if OPEC member states comply fully with output cuts agreed with Russia and other producers in a grouping known as OPEC+.
“The next big factor I see on the horizon is whether OPEC+ would want to extend its cuts beyond Q1 2020, which at current price levels I think they might be incentivised to do,” said Howie Lee, economist at Singapore’s OCBC bank.
The United Arab Emirates’ energy minister said this week he expects a positive meeting when OPEC+ producers meet in March.
OPEC+ has been curbing oil output since 2017 to balance supply and demand and support prices.