Investing.com – Oil rose on Friday, but appeared to be at an inflection point after a rough week.
Reports of record Chinese demand for crude and of producers’ struggling to boost output suggest prices should be higher. But surging U.S. stockpiles indicate the path of least resistance is lower.
The conflicting themes were on display as Brent, the global benchmark for oil, was headed for a slight drop of on the week, while remained on track for a near-3% weekly loss.
Some think WTI will return to its recent perch above $70 per barrel and dismiss this week’s tumble as aberration, or simply profit-taking, ahead of the expiry of its front-month November contract on Monday.
“Despite the weakness into contract expiration, nothing has changed,” said Phil Flynn, an analyst at Chicago’s Price Futures Group, who’s typically bullish on oil.
He referred to an earlier 3% selloff in WTI on Aug. 15, which he said was ahead of contract expiration as well.
“That was just a correction,” he said. “So is this down move.”
Others, such as Phil Davis at PSW Investments in New York, believe WTI should trade at $65 or below in coming weeks and that Brent might slip another $5 or so to hover around $75.
“Logically, oil is overpriced with the kind of builds we’ve seen in U.S. crude lately and the growing notion that the Iran sanctions might not hit as hard as thought. The only problem is finding the right entry point to short WTI and Brent,” Davis said.
By 12:55 p.m. ET, was up 63 cents, or 0.9%, at $69.28 per barrel. rose 93 cents, or 1.2%, to $80.22.
Refinery throughput in China, the world’s largest oil importer, rose to a record high of 12.49 million barrels per day in September as some independent plants restarted operations after prolonged shutdowns over the summer to shore up inventories, government data showed.
OPEC, meanwhile, was struggling to add barrels to the market after agreeing in June to increase output, according to an internal document seen by Reuters.
Those positive points were offset by bearish data such as the U.S. crude build of 23 million barrels over the past month, that came in nearly five times above forecasts.
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Source: Investing.com
