Oil steady after OPEC Plus assurances

Oil prices steadied on Friday as OPEC Plus members Saudi Arabia and Russia said they were ready to halt or cancel production increases, but markets suffered a third straight week of losses on demand concerns.

Crude fell this week following OPEC+’s decision on Sunday to phase out some oil production cuts starting in October, amid worries about demand as a result of rising U.S. inventories.

By 13:51 GMT, Brent crude was up 23 cents, or 0.29 percent, at $80.10 a barrel, while US West Texas Intermediate crude futures were up 31 cents, or 0.41 percent, at $75.86 a barrel.

Saxo Bank’s Ole Hansen said: “After recovering from the big sell-off earlier in the week, crude oil is now starting to stabilize ahead of the release of the US jobs report. As expected, OPEC Plus members issued statements supporting the oil market. He added, “The general level of risk appetite after the jobs report is released will determine the direction of oil before the end of the week.”

Chinese data showed on Friday that exports from China, the world’s biggest crude importer, rose for a second straight month in May, while import data reinforced concerns about weak domestic demand with a decline in crude oil imports.

China’s crude oil imports fell 8.7 percent year-on-year in May, as refineries cut purchases amid extensive overhaul and maintenance activities, weaker profit margins and weak demand for refined petroleum products.

Crude imports last month were 46.97 million metric tons, or about 11.06 million barrels per day, data from the General Administration of Customs showed. That’s higher than April’s 10.88 million bpd and off a strong base of 12.11 million bpd a year ago.

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Chinese consultancy OilChem said the decline in imports comes at a time when major state-owned refineries are reeling. Such as “Zhenhai” and “Zhanjiang” affiliated with “Sinopec” and “Dushanxi” and “Dalian” factories affiliated with “Petrochina Routine Maintenance”. Lin Yi, an analyst at Rystat Energy, said, “Besides higher refinery maintenance activities in April and May, lower demand for gasoline and diesel is also the main reason for the pressure. “Domestic diesel demand is weaker than expected this year with a rapid influx of LNG trucks due to relatively cheap gas prices.”

Crude oil inventories have started to rise since mid-April, despite a slowdown in imports in May due to a decline in crude oil production. Smaller independent plants in the eastern refining hub of Shandong have also cut output as higher crude costs squeeze refining margins, prompting some to process cheaper fuel oil.

According to Vortexa Analytics, China’s above-ground crude stockpiles rose to 946 million barrels from the end of last year, reflecting weak demand from refineries.

However, ANZ analysts said in a note that improved refining margins would lift crude imports again during June and the third quarter.

In a separate context, Algerian oil and gas company Sonatrach announced on Friday that it had signed a memorandum of understanding with Chinese company Sinopec to expand cooperation in areas including exploration.

Sonatrac said in a statement that it “aims to expand cooperation by seeking new partnership opportunities across the entire hydrocarbon value chain, particularly in complex reservoirs, renewable energies, petrochemicals, petroleum engineering, exploration and development. and capacity building.”

Sinopec has been operating in Algeria since 2002 and is collaborating with Sonatrac on the Sarzoidin reservoir in a hydrocarbon contract signed in 2022.

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