Chinese Data, Improved OPEC Exports Weaken Oil Prices

By Adedapo Adesanya

Oil prices fell more than 4 per cent to their lowest on Tuesday since late July over mixed Chinese economic data and rising oil exports that eased fears about tight supply.

Brent crude, the global benchmark, settled at $81.61 a barrel after it went down by $3.57 or 4.2 per cent, as the US West Texas Intermediate (WTI) crude futures closed at $77.37 per barrel after losing $3.45 or 4.3 per cent.

A recovery in oil exports from the Organisation of Petroleum Exporting Countries (OPEC) has added to the pressure on oil prices.

OPEC crude exports are up by about 1 million barrels per day since their August low, as a result of seasonally lower domestic demand in the Middle East.

On the demand side, China’s crude oil imports in October showed robust growth but its total exports of goods and services contracted at a quicker pace than expected.

The world’s largest oil importer consumed 13.52 per cent more crude oil in October than a year earlier, data showed on Tuesday, as refiners stepped up purchases using fresh import quotas and as domestic fuel demand expanded during the Golden Week holiday.

Crude oil arrivals last month into China totalled 48.97 million metric tons, or 11.53 million barrels per day, according to the General Administration of Customs, up marginally compared with 11.13 million barrels per day in September.

Year-to-date imports by the world’s largest oil buyer amounted to 473.22 million tons, or 11.36 million barrels per day, an increase of 14.4 per cent from a year earlier.

Meanwhile, exports shrank 6.4 per cent from a year earlier in October, customs data showed on Tuesday, faster than a 6.2 per cent decline in September.

US crude oil stocks rose by almost 12 million barrels last week, market sources said citing American Petroleum Institute (API) figures.

The official data from the US Energy Information Administration (EIA) will be released later on Wednesday.

Also pressuring prices was a lift in the US Dollar Index from recent lows, making oil more expensive for holders of other currencies.

The market also continued to monitor the development in the Middle East, which has so far not had any impact on oil supply.