Oil Prices Climb on China Demand, Bakken Differential at -$3.42

Crude oil prices posted solid gains in midday trading Friday, with supportive global demand data countering a reported rise in U.S. inventories. West Texas Intermediate (WTI) crude for September delivery was trading at $78.38 per barrel, up $1.09 or 1.41%. The global benchmark, Brent crude, rose $1.24 to $83.73 per barrel, a 1.5% increase.

The price strength comes despite a reported build in U.S. commercial crude stocks. According to Rigzone, citing the latest U.S. Energy Information Administration weekly report, crude oil inventories, excluding the Strategic Petroleum Reserve, stood at 407.0 million barrels as of July 31.

A key driver for the market was data showing a rebound in demand from the world's largest crude importer. Rigzone reported that China's monthly crude imports rebounded in July from a near-decade low. The increase followed a pickup in flows through the Strait of Hormuz and refiners boosting purchases from nations outside the Middle East, including Russia.

For Bakken producers, the price move is tempered by the region's differential. The Bakken crude differential to WTI was reported at -$3.42 per barrel midday Friday. This means Bakken-quality crude at the wellhead is priced approximately at $74.96 per barrel when accounting for the discount to the U.S. benchmark.

Natural gas prices also saw modest upward movement. The front-month contract was trading at $2.67 per MMBtu, up $0.03 from the prior settlement.

The day's price action indicates traders are weighing mixed fundamental signals. The U.S. inventory build, as reported by the EIA, typically applies downward pressure on prices. However, the stronger-than-expected import data from China appears to be the dominant factor, easing concerns over sustained demand weakness in a major consuming region.

For operators in the Williston Basin, the sustained price above $75 for WTI provides a stable revenue environment, though the local differential impacts netbacks. The current differential is within a typical range for Bakken crude, which trades at a discount due to transportation costs and quality specifications compared to the WTI benchmark delivered at Cushing, Oklahoma.

Market participants will continue to monitor global inventory trends and demand indicators for direction. The combination of steady U.S. production, fluctuating inventories, and international demand shifts will remain key price drivers for Bakken operators in the coming weeks.