© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
By Scott DiSavino
NEW YORK (Reuters) – Oil prices erased most of their losses and were trading little changed on Thursday following reports China was prepared to buy more oil to meet growing demand.
Brent futures for November delivery fell 11 cents, or 0.1%, to $78.53 a barrel by 11:43 a.m. EDT (1543 GMT), while U.S. West Texas Intermediate (WTI) crude rose 48 cents, or 0.6%, to $75.31.
Brent futures for December, which will soon be the front-month, were up 0.3% to $78.30 a barrel.
Earlier in the day prices fell over $1 a barrel on higher U.S. crude oil inventories and a strong dollar.
Phil Flynn, senior analyst at Price Futures Group in Chicago, said the late morning futures price move higher was due to a report that China was prepared to buy more oil.
China Premier Li Keqiang said the world’s biggest crude importer and No.2 consumer will ensure its energy, power supply and will keep economic operations within a reasonable range.
A possible dampener on oil prices has been the power crisis and housing market concerns in China, which have hit sentiment because any fallout for the world’s second-biggest economy is likely to affect oil demand, analysts have said.
China’s factory activity unexpectedly shrank in September due to wider curbs on electricity use and elevated input prices.
Meanwhile, inventories have risen in the top oil consumer, the United States. Government data on Wednesday showed U.S. oil and fuel stockpiles increased by 4.6 million barrels to 418.5 million barrels last week. [EIA/S]
Last week’s rise in U.S. inventories came as production in the Gulf Coast returned close to levels reached before Hurricane Ida struck about a month ago.
In another usually bearish development, the U.S. dollar (DXY) hit a new one-year high earlier in the day, making oil more expensive for holders of other currencies. [USD/]
But expectations of a continued crude supply deficit helped support prices. Citigroup (NYSE:C) is forecasting oil balances to be in a 1.5 million barrel per day (bpd) deficit on average over the next six months, even with continued supply increases.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, are next week expected to hold to a pact to add 400,000 bpd to their output for November.
PVM analyst Tamas Varga said that expected growth in demand means that the agreed output increase would not be sufficient to prevent declining inventories for the rest of the year.
Oil prices little changed on report China ready to buy more
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