Oil Price Fundamental Daily Forecast – Lower on Drop in China Crude Imports in September

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Monday after data from China continued to show weak demand as strict COVID-19 policies and fuel export curbs depressed consumption.

At 11:20 GMT, December WTI crude oil is at $84.03, down $1.02 or -1.20% and December Brent crude oil is at $92.59, down $0.91 or -0.97%. On Friday, the United States Oil Fund ETF (USO) settled at $70.59, up $0.41 or +0.58%.

China’s Sept Crude Oil Imports Fall, Fuel Exports Rise

China’s crude oil imports in September were 2% below their level a year earlier, data showed on Monday, as independent refiners curbed throughput amid thin margins and lackluster demand.

However, state-run refiners lifted fuel exports to the highest monthly volume since June 2021 to cash in on robust export margins, according to data from the General Administration of Customs that was released a week behind schedule.

“The recent recovery in oil imports faltered in September,” ANZ analysts said in a note, adding that independent refiners failed to utilize increased quotas as ongoing COVID-related lockdowns weighed on demand.

“This was exacerbated by falling refinery margins and product export curbs,” the analysts said.

Russia, China Big Suppliers to China

China’s oil imports from Russia soared 22% in September from a year earlier, but were a touch behind top supplier Saudi Arabia, as independent refiners bought more lower-priced Russian fuel in the face of weak domestic refining margins.

Supplies from Russia, including oil pumped via the East Siberia Pacific Ocean pipeline and seaborne shipments from Russia’s European and Far Eastern ports, totaled 7.46 million tonnes, data from the Chinese General Administration of Customs showed on Monday.

The amount, equivalent to 1.82 barrels per day (bpd), eased from 1.96 million bpd in August and compared to the record high of nearly 2 million bpd in May.

Imports from top supplier Saudi Arabia reached 7.53 million tonnes, or 1.83 million bpd, versus August’s 1.99 million bpd and were 5.4% lower than a year earlier.

Daily Forecast

The price action indicates that crude oil is going to have a hard time mounting a substantial rally as long as there remains the threat of additional COVID restrictions in China. Additionally, traders remain concerned over the impact of high inflation and rising interest rates on global economic growth.

These events may keep a lid on prices over the short-term. However, bullish conditions could improve in December when the European Union’s embargo on Russian Energy products begins. Prices will also be boosted by the OPEC+ decision to trim about 2 million barrels of crude oil from its daily production.