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Oil steadies after report China ready to buy more

CommoditiesSep 30, 2021 03:24PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Scott DiSavino

NEW YORK (Reuters) -Oil futures were little changed on Thursday as reports China was prepared to buy more oil and other energy supplies to meet growing demand offset price pressure from an unexpected rise in U.S. crude inventories and a strong dollar.

Brent (LCOc1) futures for November delivery fell 12 cents, or 0.2%, to settle at $78.52 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 20 cents, or 0.3%, to settle at $75.03.

Earlier in the day prices at both benchmarks dropped over $1 a barrel.

"The expiration of NYMEX products and Brent crude ... spiked volatility," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Brent futures for December, which will soon be the front-month, were up 0.3% to $78.31 a barrel. New York Harbor Ultra Low Sulfur Diesel (ULSD) futures, meanwhile, closed at their highest since October 2018 for a second day in a row.

China Premier Li Keqiang said the world's biggest crude importer and No.2 consumer will ensure its energy, power supply and will keep economic operations within a reasonable range.

"If China is happily paying any price for energy, this could intensify the energy crunch in Europe," said Edward Moya, senior market analyst at OANDA.

British petrol stations are still seeing unprecedented demand with more than a quarter of pumps still dry as the fuel crisis cut road traffic volumes to the lowest level since the COVID-19 lockdowns ended two months ago.

A possible dampener on oil prices has been the power crisis and housing market concerns in China, which have hit sentiment because any fallout for the world's second-biggest economy is likely to affect oil demand, analysts have said.

China's factory activity unexpectedly shrank in September due to wider curbs on electricity use and elevated input prices.

Meanwhile, inventories have risen in the top oil consumer, the United States. Government data on Wednesday showed U.S. oil and fuel stockpiles increased by 4.6 million barrels to 418.5 million barrels last week. [EIA/S]

Last week's rise in U.S. inventories came as production in the Gulf Coast returned close to levels reached before Hurricane Ida struck about a month ago.

In another bearish development, the U.S. dollar hit a new one-year earlier in the day, making oil more expensive for holders of other currencies. [USD/]

But expectations of a continued crude supply deficit helped support prices.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, are next week expected to hold to a pact to add 400,000 barrels per day to their output for November.

"Rystad Energy expects the group to take a wait-and-see approach, not least because the group has yet to demonstrate its ability to ramp up oil supply quickly," said Louise Dickson, senior oil markets analyst at Rystad Energy.

Stalled talks between Iran and world powers to reinstate a 2015 nuclear deal will resume "soon", the European Union's foreign policy chief Josep Borrell said on Thursday. A nuclear deal should allow Iran to export more crude.

Oil steadies after report China ready to buy more
 

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Comments (9)
Kochar Bipin
Kochar Bipin Sep 30, 2021 12:38PM ET
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China produces over 50% of the world's steel and aluminum - by cutting down on their production and imposing export restrictions on these, is going to lead to sharp price increases of metals
Alan Rice
Alan Rice Sep 30, 2021 12:31PM ET
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Free oil for all !! -$28.5 T ++ ?
Emmanuel Jabin
Emmanuel Jabin Sep 30, 2021 11:31AM ET
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"Buy the rumour, Sell the fact"
Steven king
Steven king Sep 30, 2021 9:51AM ET
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read Phil Flynn For a better perspective.. At least he is reporting how it is..
Steven king
Steven king Sep 30, 2021 9:49AM ET
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Swell?? really its been a draw down for a while. So one week build becomes a swell.. Look at the inventory levels 3 years ago. Reuters you have to do better than this. This is CNN, and MSNBC propaganda. Why follow in their footsteps?? Holy smokes
Manbear Pig
Manbear Pig Sep 30, 2021 9:31AM ET
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swell? it barely made any kind of dent
Emir Safa
Emir_Safa Sep 30, 2021 5:54AM ET
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The bankers do not understand the oil market, the issue in supply may be an oversupply, not a supply deficit, if the price level does not go below the collective madness level the only issue will be the oversupply issue.
New Jazenevd
New Jazenevd Sep 30, 2021 5:30AM ET
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Oil price rising was expected and inevitable, warranted by Burisma Joe destruction of US oil industry. The price goes to triple digits and car driving becomes expensive habit, Dems will blame “gouging”, they could blame themselves.
Emir Safa
Emir_Safa Sep 30, 2021 4:13AM ET
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It was not a surprise. in fact inventory increase confirmation was as expected! Saying "surprise" for an expected thing proves your forecast was wrong. and also reduces the reliability of your current forecasts.
 
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