Falling Chinese Imports Hold Back Oil
Oil prices were mainly flat Wednesday morning after weak Chinese data and receding geopolitical risk factors.
Brent crude, the global benchmark, was up 0.11%, at $63.76 a barrel on London's Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.14% at $57.12 a barrel.
Chinese customs data released Wednesday morning showed oil imports at roughly 7.3 million barrels a day in October, down from 9 million barrels a day the month prior--the "weakest monthly imports seen since October 2016," according to Dutch bank ING Groep.
Giovanni Staunovo, a commodities analyst at UBS Wealth Management, called China's import contraction surprising. "Considering that China was one of the countries removing excess production from the market, there is a concern if this trend continues," he said.
At the same time, the market appeared to consolidate some of the record gains of recent days, as concerns over political turmoil in Saudi Arabia faded.
Crude prices earlier in the week hit two-year highs--with Brent nearly breaching $65 a barrel--after Saudi Crown Prince Mohammed bin Salman had more than five dozen princes, ministers and prominent businessmen detained in an alleged corruption crackdown over the weekend.
But the upheaval is "not affecting oil production" and there is "no change on the oil policy side," Mr. Staunovo said, suggesting Saudi Arabia would continue to abide by an OPEC-led agreement to curb production.
The market also cooled in response to an updated forecast Tuesday from the U.S. Energy Information Administration, upping its supply growth projection to 720,000 barrels a day for 2018. U.S. crude production is now expected to average 9.95 million barrels a day next year.
"The U.S. shale machine is poised to shift up a gear as producers make hay amid the improving price backdrop," said Stephen Brennock, an analyst at brokerage PVM Oil Associates Ltd.
Oil market participants will be watching for inventory data Wednesday from the EIA to assess whether the amount of crude oil in storage has continued to decline. Traders and analysts surveyed by The Wall Street Journal on average expect crude stockpiles to have fallen by 2.1 million barrels in the week ended Nov. 3.
Among refined products, Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 0.19%, at $1.81 a gallon. ICE gasoil, a benchmark for diesel fuel, changed hands at $563.75 a metric ton, up 0.09% from the previous settlement.
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(END) Dow Jones Newswires
November 08, 2017 06:45 ET (11:45 GMT)