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Oil prices slip after China economic data; focus on OPEC+ supply

CommoditiesOct 19, 2020 03:25AM ET
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© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Florence Tan

SINGAPORE (Reuters) - Oil prices fell on Monday after China's third-quarter economic growth rose came in weaker than expected, underscoring concerns that surging coronavirus cases globally are impacting demand in the world's largest oil importer.

The world's second-largest economy expanded by 4.9% in the third quarter from a year earlier, missing analyst expectations of 5.2%, government data showed. Refiners in China, the world's second-largest oil user, slowed their processing rates in September.

Brent crude for December (LCOc1) slipped 20 cents, or 0.5%, to $42.73 a barrel by 0826 GMT. U.S. West Texas Intermediate crude for November (CLc1) was at $40.69 a barrel, down 19 cents. The contract will expire on Tuesday.

Brent rose 0.2% last week while WTI gained 0.7%, after crude and oil product inventories in the United States, the world's top oil consumer, fell.

The Chinese data showed growth in goods and services is softening while the data on crude processing was "disappointing", said Howie Lee, an economist at Oversea-Chinese Banking Corp (OCBC).

"We're likely going to see prices being soft for the rest of the day," Lee said.

China's oil-buying frenzy earlier this year is expected to slow in the fourth quarter amid high inventories and limited import quotas for independent refiners.

Investors are focusing on the Joint Ministerial Monitoring Committee (JMMC) meeting of the OPEC+ group happening later on Monday, added OCBC's Lee.

OPEC+ consists of the Organization of the Petroleum Exporting Countries and producer allies such as Russia. The JMMC may decide whether it will delay plans reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd starting in January.

Prices are unlikely to rally on a delay since that has been priced in by the market, Lee said.

Last week's meeting of the OPEC+ Joint Technical Committee reported a gloomier fuel demand outlook because of fears that a prolonged second wave of the COVID-19 pandemic and a jump in Libyan output could push the oil market into surplus next year.

"There are growing calls for OPEC+ to scrap their current plan of easing output cuts," ING analysts said in a note.

However, the market may have to wait until the next OPEC+ meeting on Nov. 30 and Dec. 1 for any concrete decision, they said.

Energy firms in the United States, the world's biggest oil producer, last week added the most oil and natural gas rigs since January as producers return to the well pad with crude prices holding around $40 a barrel over the past several months.

Oil prices slip after China economic data; focus on OPEC+ supply
 

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Comments (4)
Jagjeet Singh
Jagjeet Singh Oct 19, 2020 4:08AM ET
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today what will be closing experts plz guide
Tyler Phillis
Tyler Phillis Oct 18, 2020 11:46PM ET
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Economic growth requires cheap, plentiful energy that is used toward productive ends. The oil prices will not recover until demand recovers. China can’t be trusted with the truth, so I’d say that until the US and the other freer nations show recovery, oil supply will drive oil prices down.
Steven Kemp
Steven Kemp Oct 18, 2020 9:12PM ET
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all false
Mse II
Mse II Oct 18, 2020 9:12PM ET
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We don't need government bailouts. Just relief for those impacted by lockdowns.
Robert Nchor
Robert Nchor Oct 18, 2020 9:12PM ET
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Relief for those impacted by the lockdowns? Say that slowly while looking into the mirror. The good thing is that you aren't smart enough to be part of any decision making like that.
Tyler Phillis
Tyler Phillis Oct 18, 2020 9:12PM ET
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Robert Nchor What’s wrong with me cutting a check from your bank account? Oh, wait...that’s actually stealing. How about YOU cut a check to me from your bank account, while the government holds a gun to your head. Actually, that sounds like stealing, too. Would it be stealing if the GOVERNMENT cut me a check from your bank account? Yeah, sounds like stealing, too. What if the government cut a check from everyone’s bank account to everyone else, while holding a gun to EVERYONE’S head?
Kilo Byte
Kilo Byte Oct 18, 2020 9:12PM ET
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The people squealing the loudest to keep everything locked down are the same ones collecting gubment handouts to sit at home and do nothing.  Follow the money.
Kilo Byte
Kilo Byte Oct 18, 2020 9:12PM ET
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Tyler Phillis  The government is already printing all the money it wants.  Abolish income taxes.
 
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