Oil prices edged down on Tuesday as weak Chinese demand offset U.S. supply disruptions from Tropical Storm Francine and as global oil oversupply risks continued to weigh on the market.
Brent crude futures were down 32 cents, or 0.45%, to $71.51 a barrel by 0652 GMT. U.S. West Texas Intermediate crude futures lost 38 cents, or 0.55%, to trade at $68.33 a barrel.
Both benchmarks gained around 1% at Monday’s settlement.
The U.S. Coast Guard ordered the closure of all operations at Brownsville and other small Texas ports on Monday evening, as Tropical Storm Francine barrelled across the Gulf of Mexico.
The port of Corpus Christi remained open but with restrictions.
The tropical storm is forecast to strengthen significantly over the next couple of days, and was expected to become a hurricane on Monday night or Tuesday morning, according to the National Hurricane Center (NHC).
Exxon Mobil said it shut in output at its Hoover offshore production platform, while Shell paused drilling operations at two platforms. Chevron also began shutting in oil and gas output at two of its offshore production platforms.
“At least 125,000 barrels per day (bpd) of oil capacity is at risk of being disrupted,” ANZ analysts said in a note, citing data from the NHC.
However, signs of weakening global demand and expectations of existing oil oversupply continued to weigh on the market.
Oil prices edge up as storm approaches US Gulf Coast
China data on Monday showed the country’s consumer inflation accelerated in August to the fastest pace in half a year but domestic demand remained fragile, and producer price deflation worsened.
And while data released on Tuesday showed China’s exports grew at their fastest pace in nearly 1-1/2 years in August, imports disappointed amid depressed domestic demand.
“Chinese trade data has not helped the oil market, it has only reinforced the demand concerns that have been lingering in the market for a while now,” said Warren Patterson, Singapore-based head of commodities strategy at ING.
“The latest data shows yet another month of year-on-year declines in crude imports, which now leaves YTD imports trailing last year by more than 3%.”
Later in the day, markets will be watching for the monthly oil market report from the Organization of the Petroleum Exporting Countries (OPEC).
The U.S. Energy Information Administration is also set to publish its short-term energy outlook with forecasts for the global market and U.S. crude oil output.
Global commodity traders Gunvor and Trafigura anticipate oil prices may range between $60 and $70 per barrel on weakened Chinese demand and persistent global oversupply, executives told Asia Pacific Petroleum Conference (APPEC) attendees on Monday.
Lower crude prices could provide opportunities for China to increase oil stockpiles, Pongpun Amornvivat, senior executive vice president for trading at Thailand’s energy company PTT, told the conference on Tuesday.
However, the moderate rise of 0.5% in overall China imports, which was below expectations, showed Chinese consumers remain extremely cautious and reluctant to spend, said Tony Sycamore, analyst at IG.
“Without further fiscal easing, its hard to see this changing in the near future and this conundrum will continue to cast a shadow over the Chinese economy and demand for crude oil,” Sycamore said.
Source: Brecorder
