November 30, 2022

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Oil price stability on US business activity, Chinese demand data

Oil price stability on US business activity, Chinese demand data
  • US business activity weakens again in October -S&P Global
  • China’s crude oil imports fell in September and fuel exports rose to a 15-month high

NEW YORK, Oct 24 (Reuters) – Oil prices settled in choppy trading on Monday, as weak U.S. business data dampened expectations for further interest rate hikes, while data showed demand from China remained subdued in September, as prices capped .

Brent crude futures for December settlement were down 21 cents, or 0.2%, at $93.29 a barrel by 12:08 p.m. ET (1608 GMT), after rising 2% last week. US West Texas Intermediate crude for December delivery lost 34 cents, or 0.4%, to $84.71 a barrel. Both benchmarks fell by $2 a barrel earlier in the session.

Customs data showed that China’s crude oil imports for September, at 9.79 million barrels per day, despite rising in August, were down 2% from a year earlier, as independent refineries limited production amid weak profit margins and a decline in demand.

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“The latest recovery in oil imports faltered in September,” ANZ analysts said in a note, adding that independent refineries failed to capitalize on increased quotas as the ongoing COVID-related shutdown affected demand.

ING analysts said in a note that uncertainty about the non-spreading policy of the Corona virus and the real estate crisis in China are undermining the effectiveness of pro-growth measures, even though third-quarter GDP growth exceeded expectations.

Oil prices regained some of their gains after data showed business activity in the United States contracted for the fourth consecutive month in October, as manufacturers and service firms in a monthly survey of purchasing managers reported weak customer demand.

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positive signal

Standard & Poor’s Global said its US composite PMI production index, which tracks the manufacturing and services sectors, fell to 47.3 this month from a final reading of 49.5 in September.

Phil Flynn, an analyst at Price Futures Group, said that this weakness may indicate that the US Federal Reserve’s interest rate increases to fight inflation have been successful and may convince it to slow down its rate hike policies, which is a positive sign for fuel demand.

“The error in the PMI number is a sign that the economy may be slowing down a bit, which is turning out to be bullish,” Flynn said.

Brent crude rose last week despite US President Joe Biden’s announcement to sell the remaining 15 million barrels of strategic oil reserves, part of a record release of 180 million barrels that began in May.

Biden added that his goal would be to replenish stocks when US crude reached about $70 a barrel.

But Goldman Sachs said the share issue was unlikely to have a significant impact on prices.

“Such a statement is likely to have a modest impact (less than $5 per barrel) on oil prices,” the bank said in a note.

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Additional reporting by Noah Browning and Florence Tan; Editing by Margarita Choi and David Holmes

Our criteria: Thomson Reuters Trust Principles.