Oil prices rose on Thursday due to the strong demand growth expected from China and crude output cuts expected from OPEC members. The increased level of global supplies and U.S. oil inventories slowed crude prices rise in the markets.
Oil futures on Brent were traded at $55.30 a barrel at 07:17 GMT, they rose by 20 cents from the last close. The futures on U.S. West Texas Intermediate (WTI) crude grew by 7 cents and were traded at $52.32 a barrel. Analysts think that the growth of Chinese car sales has provided support for oil prices.
Vehicles sales in China have risen by 13.7 during 2015-2016. The amount of sales was defined as 28 million sold vehicles. China National Petroleum Corporation (CNPC) informed on Thursday that the country’s net oil imports would likely increase by 5.3% to 396 million tons (approximately 8 million barrels per day) during 2017, and the total oil demand would possibly reach a record number of 594 million tons (or approximately 12 million BPD).
Saudi Arabia is going to conduct further supply cuts as a part of the Organization of the Petroleum Exporting Countries (OPEC) agreement. After several February’s restrictions to customers in China, India, and Malaysia, the producing country wants to cut the supply for Europe and the United States, but secure its customers’ interests in Asia.
According to the information published on Thursday, Iraq is going to cut the oil production by 160,000 BPD since the beginning of January and until the end of the month. The cut will reach a rate of 210,000 BPD. Analysts expected the country would not follow the agreement at the full rate.
The BMI Research estimated compliance of the OPEC and non-OPEC participants’ agreement to cut oil production at 73%, including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain, and Oman. However, these countries are not necessary going to reduce their export rates because the domestic rate of demand is at the lowest level during this period of the year.
The U.S. Energy Information Administration inventories report indicated that crude stocks had increased by 4.1 million barrels to 483.11 million barrel, the rate unexpected by the traders. Meanwhile, the demand remained high as U.S. refinery runs of 17.1 million barrels per day (BPD), and it rose by 418,000 BPD on the week.