Oil up but posts weekly loss on stock build, trade tensions

Oil prices rose on Friday on signs of surging demand in China, the world's No. 2 oil consumer, although prices were headed for a second weekly decline on swelling U.S. inventories and concern that trade wars were curbing economic activity.

Brent crude futures rose 43 cents to $79.66 a barrel, a 0.5 percent gain. West Texas Intermediate (WTI) crude futures settled 47 cents higher, or 0.7 percent, at $69.13 a barrel.

For the week, Brent crude was 0.3 percent lower. WTI fell nearly 3 percent this week and below four-year highs reached in early October.

WTI's discount to Brent <WTCLc1-LCOc1> widened to its most since June 8, hitting $11.00 a barrel.

Refinery throughput in China, the world's largest oil importer, rose in September to a record 12.49 million barrels per day (bpd), government data showed.

"China's healthy oil demand, together with persistently high compliance of countries participating in the OPEC-led output-cut agreement, are supportive of prices in today's trading session," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.

An OPEC and non-OPEC monitoring committee found that oil producers' compliance with a supply-reduction agreement fell to 111 percent in September from 129 percent in August, three sources familiar with the matter said. The Organization of the Petroleum Exporting Countries has led cuts from major oil producers since 2017 to shore up prices.

Oil prices also rose along with rising equities prices on Wall Street. The intermittent correlation between oil and equities "has been strong of late as the oil complex has been able to put some seemingly bullish geopolitical developments on hold for now while focusing, instead, upon some significant loosening in global oil balances," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Pressuring prices this week was U.S. government data showing crude inventories last week climbed 6.5 million barrels, a fourth straight weekly build and almost triple the amount analysts had forecast.

Rising supplies, particularly at Cushing, Oklahoma, the delivery hub for WTI pushed the market into contango, in which nearby prices trade lower than forward prices. This happened on Thursday for the first time since May 22.

On Friday, front-month U.S. crude futures traded at the biggest discount to the second month in nearly a year. Traders anticipated further inventory builds in Cushing as new pipelines come online.

The U.S. oil drilling rig count, an early indicator of future output, rose by four to 873 this week, the highest since March 2015, General Electric Co's Baker Hughes energy services firm said on Friday. <RIG-OL-USA-BHI>

The refinery throughput data fed hopes about oil demand in China, even though economic growth slowed in the third quarter to its weakest since the global financial crisis.

Investors are worried China's trade war with the United States could slow growth and oil demand.