How Is the Released Chinese Data Shaping the Energy Market?

Although weaker indicators of U.S. business activity tempered expectations of aggressive interest rate hikes and limited price cuts, data showed Chinese demand remained weak in September, and a stronger U.S. dollar weighed on oil prices. Oil prices ultimately settled lower in choppy trade on Monday.

After climbing 2% last week, Brent oil futures for December delivery ended the day at $93.26 a barrel, down 24 cents, or 0.3%. U.S. West Texas Intermediate crude dropped by 47 cents, or 0.6%, to $84.58 per barrel. Both benchmarks had earlier in the session declined by $2 per barrel. Tariff statistics released on Monday showed that China’s crude oil imports in September were 9.79M barrels, down 2 percent from a year earlier but more than in August.

COVID-19 Continues Its Loom Over Energy Market

The recent improvement in oil imports ended in September, according to ANZ analysts. Ongoing COVID-related lockdowns affected the demand. Hence, independent refiners failed to use higher quotas.

Third-quarter gross domestic product growth exceeded estimates. However, the efficacy of pro-growth initiatives is undermined by uncertainty surrounding China’s zero-COVID policy and the housing crisis. The U.S. dollar’s continued strength also hampered oil prices. After another alleged Japanese intervention in foreign exchange markets, the dollar went up again for a portion of the trading day. When the currency is stronger, oil costs higher for purchasers outside the U.S.

The manufacturing and services sectors are monitored by S&P Global’s flash U.S. Composite PMI Output Index, which dipped to 47.3 this month from a final value of 49.5 in September, according to the company. According to Phil Flynn, an analyst at Price Futures Group, this decrease may suggest that the U.S. Federal Reserve’s interest rate rises to combat inflation have been successful and may encourage it to halt its rate raise plans, a favorable indication for gasoline consumption.