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Oil prices ease on Chinese demand data, stronger dollar

Commodities Oct 24, 2022 03:32PM ET
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© Reuters. FILE PHOTO: Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. Picture taken August 22, 2019. REUTERS/Stringer
 
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By Laila Kearney

NEW YORK (Reuters) -Oil settled lower in choppy trade on Monday as data showing demand from China remained lackluster in September and a strong U.S. dollar weighed, while weakening U.S. business activity data eased expectations for more aggressive interest rate hikes and limited price decline.

Brent crude futures for December delivery settled at $93.26 a barrel, down 24 cents, 0.3%, after rising 2% last week. U.S. West Texas Intermediate crude lost $84.58 a barrel, losing 47 cents, 0.6%. Both benchmarks had fallen by $2 a barrel earlier in the session.

Although higher than in August, China's September crude imports of 9.79 million barrels per day were 2% below a year earlier, customs data showed on Monday, as independent refiners curbed throughput amid thin margins and lacklustre demand.

"The recent recovery in oil imports faltered in September," ANZ analysts said in a note, adding that independent refiners failed to utilise increased quotas as ongoing COVID-related lockdowns weighed on demand.

Uncertainty over China's zero-COVID policy and property crisis are undermining the effectiveness of pro-growth measures, ING analysts said in a note, even though third-quarter gross domestic product growth beat expectations.

Ongoing strength in the U.S. dollar, which was up again for part of the trading session following another suspected foreign exchange intervention by Japan, also posed problems for oil prices. A stronger dollar makes oil more expensive for non-U.S. buyers.

"Further dollar strength would weigh on WTI values with a test of our expected downside at the 79.50 mark likely by week’s end," said Jim Ritterbusch of Ritterbusch and Associates.

Oil prices regained some ground after data that showed U.S. business activity contracted for a fourth straight month in October, with manufacturers and services firms in a monthly survey of purchasing managers both reporting weaker client demand.

POSITIVE SIGNAL

S&P Global (NYSE:SPGI) said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 47.3 this month from a final reading of 49.5 in September.

That weakening could indicate that the U.S. Federal Reserve's interest rate increases to fight inflation have been working and may persuade it to slow its rate hike policies, a positive signal for fuel demand, said Phil Flynn, an analyst at Price Futures group.

"The miss on the PMI number is a sign that the economy may be slowing a bit, which turns out to be bullish," Flynn said.

Brent rose last week despite U.S. President Joe Biden announcing the sale of a remaining 15 million barrels of oil from the Strategic Petroleum Reserves, part of a record 180 million-barrel release that began in May.

Biden added that his aim would be to replenish stocks when U.S. crude is around $70 a barrel.

But Goldman Sachs (NYSE:GS) said the stocks release was unlikely to have a large impact on prices.

"Such a release is likely to have only a modest influence (<$5/bbl) on oil prices", the bank said in a note.

(Adttional reporting by Noah Browning and Florence Tan; Editing by Marguerita Choy, David Holmes and Cynthia Osterman)

Oil prices ease on Chinese demand data, stronger dollar
 

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Comments (7)
Ac Tektrader
Ac Tektrader Oct 24, 2022 12:08PM ET
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market forces, decisions of oil corporation's boardrooms, and bankruptcies caused by a crude oil crash, are the rmain easons for present higher gas prices, not political parties. there is simple minded partisan blame games by the far right that is purely partisan. going on...the present administration has done a reasonable job in trying to stabilize gas prices. unfortunately they are limited in the options they have to push prices any further to the downside. technically we could see further tests of resent lows. time will tell.
Ac Tektrader
Ac Tektrader Oct 24, 2022 11:18AM ET
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on this site, people complaining about their inability to understand how the crude markets trade. trying to blame some political party for their ignorance.
Andrew Ulferts
Andrew Ulferts Oct 24, 2022 9:17AM ET
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You don’t need an excuse to drop oil prices every Monday morning. If you trade oil or oil equities you know that oil is always deep red Monday, then green by mid morning. Your fake news is showing.
Brad Albright
Brad Albright Oct 24, 2022 9:17AM ET
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Well, that turned out wrong.
Rubbing Hands
Rubbing Hands Oct 24, 2022 7:34AM ET
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"thin margins" This article is idiocy. They are refining diesel and jet fuel like crazy and exporting it. these people who write these articles belong in prison for all the lies.
hv lakshmi
hv lakshmi Oct 23, 2022 10:03PM ET
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Looks like is far stronger than what is being projected as the war seems to be Russia Vs Most of the world.
Michael Roal Casa
Michael Roal Casa Oct 23, 2022 9:46PM ET
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tRump is the reason Russia is in Ukraine, putin got brave on trumps watch
andrew cando
andrew cando Oct 23, 2022 9:46PM ET
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lol
donald terry
donald terry Oct 23, 2022 9:46PM ET
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that maybe the most uneducated thing I read for a long time.
Rubbing Hands
Rubbing Hands Oct 23, 2022 9:46PM ET
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democrats always have an excuse but no solution. witch hunt gang...
Jeff Chevalier
Jeff Chevalier Oct 23, 2022 9:46PM ET
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Trump wanted to pull out of NATO to give Putin a free hand in Europe without US intervention.
Stephen Fa
Stephen Fa Oct 23, 2022 9:42PM ET
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Biden's sanctions are not working.
 
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