Oil Steadies After Report of Increased Chinese Purchases, According to Reuters

By Scott DiSavino

NEW YORK – Oil futures showed little variation on Thursday as reports indicating China’s readiness to purchase more oil and energy supplies to satisfy rising demand helped counteract price pressures from an unexpected increase in inventories and a strong dollar.

Brent futures for November delivery dropped 12 cents, or 0.2%, closing at $78.52 per barrel. Conversely, U.S. West Texas Intermediate (WTI) crude increased by 20 cents, or 0.3%, settling at $75.03. Earlier, both benchmarks saw declines exceeding $1 per barrel.

Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, noted that the expiration of NYMEX products and Brent crude caused increased volatility in the market. December Brent futures, soon to become the front-month contract, rose by 0.3% to $78.31 per barrel. Additionally, New York Harbor Ultra Low Sulfur Diesel (ULSD) futures reached their highest levels since October 2018 for the second consecutive day.

China’s Premier Li Keqiang stated that the world’s largest crude importer and the second-largest consumer would ensure a stable energy supply and maintain economic operations within reasonable limits. Edward Moya, a senior market analyst, remarked that if China is willing to pay any price for energy, it could exacerbate the energy crisis in Europe.

In the UK, petrol stations are still experiencing unprecedented demand, with over 25% of fuel pumps running dry, resulting in the lowest road traffic volumes since the conclusion of the COVID-19 lockdowns two months ago.

Concerns regarding a power crisis and housing market issues in China have negatively affected sentiment, as any fallout from these issues could impact oil demand. Analysts reported that China’s factory activity unexpectedly contracted in September due to widespread electricity restrictions and high input costs.

In the United States, inventories rose, with government data revealing an increase of 4.6 million barrels to a total of 418.5 million barrels last week. This uptick in U.S. inventories followed a return to pre-Hurricane Ida production levels in the Gulf Coast region.

In a further bearish development, the U.S. dollar reached a new one-year high earlier in the day, making oil more expensive for those using other currencies. Nevertheless, persistent expectations of a crude supply deficit provided some price support.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia—collectively known as OPEC+—are anticipated to maintain their agreement to increase production by 400,000 barrels per day for November. Louise Dickson, a senior oil markets analyst at Rystad Energy, noted that the group will likely adopt a cautious approach, especially since it has yet to demonstrate the ability to quickly boost oil supply.

Additionally, stalled negotiations between Iran and global powers regarding the reinstatement of a 2015 nuclear deal are expected to resume "soon," according to the European Union’s foreign policy chief, Josep Borrell. A nuclear agreement could enable Iran to export more crude.