Chinese statistics showed that oil prices fell on Monday after the world’s biggest oil importer showed weak demand in September due to tightening coronavirus restrictions and reduced oil exports.
After increasing 2% the previous week, Brent oil futures for December settlement decreased 67 cents, or 0.7%, to $92.83 a barrel by 11:10 GMT. U.S. WTI oil for December delivery was down 89 cents or 1.1% at $84.16 per barrel. According to customs statistics released on Monday, although higher than in August, China’s crude imports in September, at 9.79M barrels per day, were 2% lower than they had been a year earlier.
Will Oil Industry Recover Recent Losses?
According to ANZ analysts, the recent improvement in oil imports ended in September. Independent refiners have not used higher quotas as demand is still under pressure due to the COVID-19 lockdown. China’s third-quarter GDP growth exceeded expectations. However, ING analysts said in a report that the country’s zero-COVID policy uncertainties and the housing crisis are lessening the impact of pro-growth policies.
Brent prices rose last week despite U.S. President Joe Biden’s order to sell the remaining 15M barrels of U.S. strategic oil reserves. The deal is part of a record 180M-barrel discharge that began in May. When U.S. crude is trading at $70 per barrel, Biden said his goal is to rebuild reserves. According to Goldman Sachs (NYSE: G.S.), the release of the stocks shouldn’t influence pricing significantly.
The bank stated in a report that such a release should have only a moderate effect ($5/bbl) on oil prices. Energy services company Baker Hughes Co. reported that U.S. energy companies added oil and natural gas rigs for the second week in a row last week.