Chinese crude imports of 9.79million barrels per day in September were two per cent below their levels a year earlier. An ANZ analyst noted: “The recent recovery in oil imports faltered in September”. They also added that ongoing Covid lockdowns in China had impacted demand.
China’s fuel demand has been hit by Government-enforced lockdowns, which have prevented travel and slowed manufacturing in the country.
A trading executive in Singapore said: “The sentiment is very low. Margins are not good, plants were not motivated to increase runs,”
While the Chinese economy grew more than expected in the third quarter, Beijing’s zero-Covid policy and property crisis has left markets uncertain and prevented the effectiveness of pro-growth measures.
The business activity indicators of Japan and the US pointed to slow economic activity in the world’s largest economies, which eased expectations for more interest rate hikes and limited price decline.
Brent crude futures for December delivery has settled at $93.26, losing 0.3 percent (24 cents) after rising two percent last week.
West Texas Intermediate Crude Futures lost $84.58 per barrel, losing 0.6 percent (47 cents).
Phil Flynn, an analyst at Price Futures Group, said: “Oil prices continue to have trouble maintaining altitude as economic turbulence around the globe is shifting focus from the market being undersupplied to a potential economic crash.”
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A strengthing dollar has also impacted oil prices, as a stronger US currency makes oil more expensive for countries outside America.
Jim Ritterbusch, from Ritterbusch and Associates, said: “Further dollar strength would weigh on WTI values with a test of our expected downside at the 79.50 mark likely by week’s end.”
S&P Global has said its US Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 47.3 this month, which may indicate that the Federal Reserve’s interest rate increases to fight inflation have been working.
Mr Flynn from the Price Futures organisation has suggested that this may mean slower rate hike policies, which is a positive sign for fuel demand.
He said: “The miss on the PMI number is a sign that the economy may be slowing a bit, which turns out to be bullish.”
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Brent prices rose last week despite US President Joe Biden’s announcement about the sale of the rest of the remaining national emergency oil reserves and efforts to refill the stockpile in an attempt to weaken high gasoline prices.
The President added that his goal was to replenish stocks when US crude is priced at around $70 a barrel.
Mr Biden said: “We’re calling it a ready and release plan, This allows us to move quickly to prevent oil price spikes and respond to international events.”
However, Goldman Sachs has warned the release would unlikely have any impact on prices.
They said: “Such a release is likely to have only a modest influence (<$5/bbl) on oil prices.”