Oil futures closed the day in lower territory Monday, after mixed Chinese macroeconomic and oil demand data, combined with a stronger dollar, put bearish pressure on the complex.
NYMEX July crude settled down 26 cents at $95.77/b, pulling up from the low of $95.19/b seen early in the US trading session, before holding a narrow range throughout much of the afternoon, as volume proved thin across the NYMEX complex.
ICE July Brent closed trading down 61 cents at $103.95/b, while the August contract settled 46 cents lower at $103.91/b, causing the backwardation to narrow sharply at the prompt. The July contract expires at the close of trading Thursday.
Brent’s premium to NYMEX crude hit its narrowest level since June 3, as the front-month contract sold off sharply, at $8.13/b shortly ahead of the 2:30 p.m. EDT (1830 GMT) NYMEX market settle.
“We’re at the upper end of a band,” Kyle Cooper, of IAF Advisors, said of the weaker crude complex Monday. “There’s not a lot to be excited about as a bull.”
Product markets also settled lower, largely in line with weaker crude prices, though NYMEX July RBOB proved the weakest component of the oil complex. Front-month RBOB closed the day down 2.34 cents at $2.8481/gal, while NYMEX July ULSD settled 93 points lower at $2.8838/gal.
Analysts said that the initial selloff across the complex was prompted by largely mixed demand and macroeconomic data out of China over the weekend, which was then compounded by a stronger dollar.
“We attribute the current price weakness to disappointing data from China which were published at the weekend,” analysts from Commerzbank said in a note, referencing figures indicating weaker oil demand throughout the early part of the year.
“The reason for this is a lower refinery utilization rate due to maintenance work, plus state restrictions on the export of refined petroleum products,” Commerzbank added. “That said, the weaker economic development in China is also likely to have contributed to the subdued demand.”
Schneider Electric commodities analyst Matt Smith referred Monday’s bearish turn as a “hangover” after markets shifted sharply higher late last week in the wake of Friday’s US unemployment data.
“[China’s] retail sales was in line, while industrial production came in just shy of consensus,” Smith said. “Meanwhile, exports showed a meager 1% gain year-on-year — the slowest rate since last July.”
The US dollar strengthened sharply against the Japanese yen overnight, helping to fuel an initial boost in the US Dollar Index, which climbed as high as 82.091 early in the session before pulling back. At 2:30 p.m. EDT (1830 GMT), the US Dollar Index was largely unchanged at 81.675.
US equities markets oscillated on either side of unchanged. At the NYMEX market settle, the Dow Jones Industrial Average was down 0.08% at 15,235.2, while the S&P 500 was 0.07% lower at 1,642.15.