Oil prices drop as China demand data disappoints

Oil prices slid 2 per cent on Monday after Chinese data showed that demand from the world’s largest crude importer remained lacklustre in September as strict COVID-19 policies and fuel export curbs depressed consumption.

Brent crude futures for December settlement fell $1.67, or 1.8 per cent, to $91.83 a barrel by 0855 GMT after rising 2 per cent last week. US West Texas Intermediate crude for December delivery was at $83.27 a barrel, down $1.78, or 2.1 per cent.

Although higher than in August, China’s September crude imports of 9.79 million barrels per day were 2 per cent below a year earlier, customs data showed on Monday, as independent refiners curbed throughput amid thin margins and lacklustre demand.

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

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

Saudi Arabia and Russia were neck and neck as China’s top two suppliers in September.

Uncertainty over China’s zero-COVID policy and property crisis are undermining the effectiveness of pro-growth measures, ING analysts said in a note, even though third-quarter gross domestic product (GDP) growth beat expectations.

Brent rose last week despite US President Joe Biden announcing the sale of a remaining 15 million barrels of oil from the US Strategic Petroleum Reserves. The sale is part of a record 180 million-barrel release that began in May.

Biden added that his aim would be to replenish stocks when US crude is around $70 a barrel.

US energy firms added oil and natural gas rigs last week for the second week in a row as relatively high oil prices encourage firms to drill more, energy services firm Baker Hughes Co said in a report.