LONDON (Reuters) – Oil prices rose on Wednesday as strong Chinese factory activity boosted commodity markets and China’s own crude production fell, but fast-growing U.S. output tempered gains.
China beat forecasts with a 7.2 percent year-on-year rise in industrial output in the first two months of 2018, while data showed Chinese crude output fell 1.9 percent.
Brent crude LCOc1 rose 29 cents to $64.93 a barrel at 1156 GMT, climbing from an earlier low of $64.43, while U.S. West Texas Intermediate (WTI) futures CLc1 rose 46 cents to $61.17.
ING commodities strategist Oliver Nugent said the Chinese industrial output was “reinforcing that bullish narrative” across the commodities market, including oil.
China is the world’s largest importer of commodities.
Chinese oil production in January and February slipped to about 3.77 million barrels per day (bpd), while the amount of crude processed by its refineries rose 7.3 percent to 93.4 million bpd, suggesting strong import demand.
This offered modest support to the Brent price, which has fallen by about 1 percent so far this week on concerns that coordinated supply cuts by OPEC and its partners might not be enough to offset the relentless rise in U.S. crude production.
U.S. oil production C-OUT-T-EIA is expected to top 11 million bpd later this year.
Rising U.S. output, as well as seasonally low demand, mean U.S. crude inventories rose by 1.2 million barrels in the week to March 9 to 428 million barrels, the American Petroleum Institute said on Tuesday.
Seasonal demand patterns for crude and refined products mean the market may only be weeks away from a run of declines.
“We are now only two to four weeks away from when weekly oil inventory data will start to draw again which should be supportive for oil prices,” SEB commodities strategist Bjarne Schieldrop said.
Weekly U.S. crude production figures will be published by the Energy Information Administration (EIA) later on Wednesday.
Reporting by Henning Gloystein; Editing by Tom Hogue and Susan Fenton