Oil prices firmed on Friday as strong Chinese oil import data and turmoil in the Middle East boosted bulls in a market that has already shown signs of rebalancing after years of excess.
Brent was at $57.23 at 0914 GMT, up 98 cents. US West Texas Intermediate (WTI) crude was at $51.41 per barrel, up 81 cents from its last settlement.
The contracts were on track for weekly gains of more than 2 percent and 4 percent, respectively.
Chinese oil imports hit 9 million barrels per day (bpd) in September, data showed on Friday. Imports averaged 8.5 million bpd between January and September, solidifying China’s position as the world’s biggest oil importer.
“We woke up with the strong data from China. That’s on the supportive side,” said Olivier Jakob, managing director of PetroMatrix.
China’s huge imports have been strongly driven by purchases for its strategic petroleum reserves (SPR).
ALSO READ: Falih tells Al Arabiya: Saudi Arabia, Russia working to stabilize oil markets
The nation has spent around $24 billion on building its crude reserves since 2015 and now holds around 850 million barrels of oil in inventory, according to the International Energy Agency (IEA).
Iraq, Iran tensions
Unrest in Iraq, and possible US action on the Iran nuclear deal, also underpinned prices.
On Friday, local television reported that tens of thousands of Kurdish fighters had deployed in the Kirkuk oil region to confront possible “threats” from Iraqi forces.
Tensions between the two, which traders fear could cut off oil exports from the region, have been building since Iraq’s Kurds overwhelmingly backed independence in a Sept. 25 vote.
Later on Friday, US President Donald Trump is expected to announce that he will not certify the 2015 Iran nuclear deal. The deal has to be re-certified every 90 days and is due for renewal on Sunday.
The step would give the US Congress 60 days to decide whether to impose sanctions, but Iran’s parliament speaker told the TASS news agency that decertification would “be the end” of the deal and cause “global chaos”.
“US sanctions could cut off a lot of Iranian oil trade finance,” FGE President Jeff Brown told Reuters this week.
Despite the bullish signals, Bernstein Research said that the Organization of the Petroleum Exporting Countries needed to extend its agreement to reduce oil output beyond its current March 2018 expiry date in order to clear stocks.
OPEC, with other producers including Russia, have agreed to production cuts of 1.8 million bpd.
“OPEC will not achieve normalized inventory levels before cuts expire at the end of March,” Bernstein analysts said, adding: “We believe an extension of cuts through 2018 should allow inventories to reach normalized levels before the end of 2018”.