Oil slides on weak Chinese demand data

Singapore — Oil prices fell on Monday after China released much-delayed trade data showing that demand in the world’s largest crude importer remained lacklustre in September as strict Covid-19 policy and fuel export curbs depress consumption.

Brent crude futures for December settlement slid 40c, or 0.4%, to $93.10 a barrel by 5.40am after rising 2% last week. US West Texas Intermediate crude for December delivery was at $84.66 a barrel, down 39c, or 0.5%.

Despite rising from August, China’s crude imports in September of 9.79-million barrels per day were 2% below the amount brought in 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 use increased quotas amid ongoing lockdowns weighing on demand.

“This was worsened by falling refinery margins and product export curbs,” they said.

Uncertainty over China’s zero-Covid-19 policy and property crisis loomed despite better-than-expected growth in the country’s third-quarter GDP, undermining the effectiveness of progrowth measures, ING analysts said in a note.

The data came a day after China’s Xi Jinping secured a precedent-breaking third leadership term on Sunday, cementing his place as the country’s most powerful ruler since Mao Zedong.

Brent rose last week despite US President Joe Biden announcing the sale of a remaining 15-million barrels of oil from the US strategic petroleum reserves. The sale is part of a record 180-million-barrel release that began in May. Biden added that his aim would be to replenish stocks when US crude is around $70 a barrel.

“Biden’s comments that the US will only buy crude once prices hit USD70/bbl provides a strong support level,” ANZ said.

Last week, US energy firms added oil and natural gas rigs for the second consecutive week as relatively high oil prices encourage firms to drill more, energy services firm Baker Hughes said in a report on Friday.

Reuters