The price of crude oil was up 2 percent in the first week in December, due to strong demand from China. A potential strike in Africa’s largest oil exporter was also a factor. It was not all good news for the oil sector however, as U.S. prices dipped by 1.7 percent on the week over worries that the surge in U.S supply will counter the supply shortage by OPEC.
Brent crude climbed 1.9 percent to close at $63.40 per barrel, while U.S. West Texas Intermediate (WTI) saw a $0.67 boost to tap out at $57.36. These increases were helped by China’s increased imports to 9.01 million barrels per day (bpd), for its second highest level on record. Given the current trend, China will be the biggest oil importer this year, ahead of the U.S.
The threat of a strike in the next few weeks in Nigeria had an upward effect on the oil price. The expected decline in output will further help oil exporting countries. Investors are also bullish on the market, as they expect the demand from China to continue to soar. Demand is expected to rise by 1.5 million bpd in 2018, with Iran, Russia and US expected to pick up the slack from OPEC producers, as they continue their proposed shortage until at least the end of next year.
The supply shortage declared by OPEC helped Brent prices to increase by 40 percent between June and October 2017, to put the price firmly around $60 per barrel. U.S. output is up to 9.7 million bpd, which is the highest it has been in four decades. New oil rigs have been added for the third consecutive week, to bring US output close to those of Russia and Saudi Arabia.