U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly higher but off its highs shortly before the regular session opening. There has been no follow-through to the upside following last week’s rally, but the markets remain in a position to challenge their highest levels in more than a month.
The catalyst behind the rally is speculation that Saudi Arabia, the world’s largest oil exporter, will continue to support output cuts by OPEC and other producers to prop up prices under new Energy Minister Prince Abdulaziz bin Salman.
Chinese Oil Imports Rise 10% on Year
China’s crude oil imports rose 9.9% on the year to 9.97 million barrels per day in August, preliminary data from the General Administration of Customs (GAC) showed Sunday. The volume in August was 2.8% higher from 9.7 million b/d in July. The country’s crude imports in August totaled 42.17 million metric tons, the preliminary GAC data showed. On a metric-ton basis, it was 2.8% higher than the 41.04 million mt in July.
The latest data brings China’s total crude oil imports for the first eight months of the year to 327.8 million mt or 9.89 b/d, up 9.6% from a year ago.
Fuel oil imports recovered to 981,000 mt in August from a multi-year low of 664,000 mt in July, despite a year-on-year drop of 28.3%.
China’s oil products exports slumped 23.4% year on year to 4.08 million mt in August, representing a 48.6% drop from July, GAC data showed.
It was the second month this year that showed year-on-year fall in oil product exports. The first year-on-year decline was in May, at 26.9% to4.87 million mt.
As a result, the country’s oil product exports posted a 4.7% year-on-year increase to 42.08 million mt in the first eight months of this year, slower than the 9% hike over January-July.
Meanwhile, oil product imports fell 6.3% on the year during the period, leading net product exports to grow 17.9% year on year to 21.59 million, the data showed.
Baker Hughes Reports Drop in Oil Rigs
Baker Hughes on Friday reported that the number of active U.S. rigs drilling for oil declined by four to 738 this week. The total active U.S. rig count, also fell by six to 898.
Today is a light day in terms of economic data, but the news about the OPEC-led production cuts is important since this has been the major fundamental story guiding prices higher for nearly two years.
Furthermore, it is probably the biggest reason why U.S. crude oil inventories have been falling this year.
Additional support is being supplied by the hope of a U.S.-China trade deal now that the two economic powerhouses have decided to resume trade talks in early October.
This article was originally posted on FX Empire
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