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Oil rises to 2019 highs on strong China demand despite economic slowdown

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Oil prices rose to their highest for 2019 on Monday after data showed refinery processing in China, the world’s second-largest oil consumer, climbed to a record in 2018, despite a slowing economy last year.

Prices are further being supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), analysts said.

International Brent crude oil futures LCOc1 were at $62.94 per barrel at 0404 GMT, up 24 cents, or 0.4 percent, from their last close. Brent earlier rose above $63 for the first time in 2019.

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U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $54.05 a barrel, up 25 cents, or 0.5 percent. It was the first time this year that WTI rose above $54 a barrel.

Traders said the price rises came after data released by China’s National Bureau of Statistics on Monday showed crude oil refinery throughput climbed to record 603.57 million tonnes in 2018, or 12.12 million barrels per day (bpd), up 6.8 percent from the previous year.

The strong oil demand figures came despite China’s 2018 economic growth slowing to the weakest in 28 years, at 6.6 percent versus 6.8 percent in 2017.

Although the slowdown was in line with expectations and not as sharp as some analysts had expected, the cooling of the world’s second-largest economy casts a shadow over global growth.

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“The global outlook remains murky, despite emerging positives from a dovish Fed (now boosting U.S. mortgage applications), faster China easing (China credit growth stabilizing) and a more durable U.S.-China truce,” U.S. bank J.P. Morgan said in a note.

Despite this, analysts said supply cuts led by OPEC would likely support crude oil prices.

“Brent can remain above $60 per barrel on OPEC+ compliance, expiry of Iran waivers and slower U.S. output growth,” J.P. Morgan said.

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It recommended investors should “stay long” crude oil, referring to buying futures in the expectation that prices will rise.

Researchers at Bernstein Energy said the supply cuts led by OPEC “will move the market back into supply deficit” for most of 2019 and that should cause prices to rise to $70 a barrel before the end of the year.

In the United States, energy firms cut the number of rigs drilling for oil by 21 in the week to Jan. 18, taking the total count down to 852, the lowest since May 2018, energy services firm Baker Hughes said in a weekly report on Friday.

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It was biggest decline since February 2016, as drillers reacted to the 40 percent plunge in U.S. crude prices late last year.

However, U.S. crude oil production C-OUT-T-EIA still rose by more than 2 million bpd in 2018, to a record 11.9 million bpd.

With the rig count stalling, last year’s growth rate is unlikely to be repeated in 2019, although most analysts expect annual production to average well over 12 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

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Reporting by Henning Gloystein; editing by Richard Pullin and Christian Schmollinger


Report typos and corrections to: [email protected].
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Iran says seized British-flagged tanker ‘free’ to leave

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Iran said on Monday that a British-flagged oil tanker is "free" to leave more than two months after it was seized in the Gulf.

"The legal process has finished and based on that the conditions for letting the oil tanker go free have been fulfilled and the oil tanker can move," government spokesman Ali Rabiei told a news conference.

He did not specify when the Swedish-owned vessel would be allowed to set sail.

The Islamic Revolutionary Guard Corps surrounded the Stena Impero with attack boats before rappelling onto the deck of the tanker in the Strait of Hormuz on July 19.

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MSNBC’s Morning Joe fact-checks Trump’s ‘slimy’ lies about Biden: ‘He’s rigging the election!’

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MSNBC's Joe Scarborough threw cold water on President Donald Trump's accusations against Joe Biden, as the Ukraine scandal continues to widen.

The "Morning Joe" host ripped the president for pressuring Ukraine's president to dig up dirt on Biden and then leaning on states to cancel Republican primaries to snuff out three challengers' campaigns.

"You talk about an inside game, rigging the process, and we talked about how Donald Trump is rigging the process on the Republican side to make sure that as many states as possible cancel democratic elections for the primary," Scarborough said. "I mean, he's learning from Vladimir Putin the way you get 100 percent of the vote is you just cancel the elections, and that's what Donald Trump is getting Republican operatives to do across the country."

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Trump condemned for moving to ‘roll back the clock’ as letter exposes his attempt to form anti-abortion UN coalition

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"It's not just abortion that they care about, they care about women's ability to exercise autonomy over their bodies and about denying them critical access to the services they need."

Global women's rights advocates raised alarm Monday after a leaked letter showed the Trump administration is pressuring U.N. member nations to join an international anti-abortion coalition.

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