Oil Moves Lower Monday

NEW YORK (DTN) -- New York Mercantile Exchange oil futures moved lower as the dollar angled higher while weak economic data from China offset an upside revision in this year’s oil demand made by the Organization of Petroleum Exporting Countries in their Monthly Oil Market Report.

At 8 a.m. CDT, NYMEX October West Texas Intermediate crude futures were 32 cents lower at $44.31 barrel. The ICE October Brent contract dropped 70 cents to $47.44 bbl. The NYMEX October ULSD futures contract eased 1.60 cents to $1.5340 gallon while NYMEX October RBOB futures tumbled 2.18 cents to $1.3481 gallon.

On Wall Street, the Dow Jones Industrial Average traced declines in overseas indices.

The dollar was slightly higher after falling to a better than two-week low, as the market awaits a Sept. 16-17 Fed meeting where a decision will be made on whether to raise interest rates for the first time in nine years.

The U.S. economy remains healthy but policymakers also have to consider the impact of weakness abroad, particularly in China, analysts said.

China's National Bureau of Statistics on Sunday reported fixed-asset investment in August rose 10.9% year-on-year while industrial production over the same period rose 6.1%, which was below expectations. China's stock market moved lower in the wake of the weak data, with analysts saying China faces the prospect that economic growth would fall short of a 7.0% target. The deepening bearish outlook on China prompted Citibank to forecast another China-led global recession in the coming years.

China's slowdown would reduce oil demand. Fuel demand in the United States is expected to decline during the fall shoulder months after the end of the peak summer driving season and prior to the peak winter heating season.

U.S. refineries are taking down units for seasonal maintenance that will likely lead to a further build in crude oil inventories, especially at the Cushing, Oklahoma, supply hub that serves as the delivery point for NYMEX West Texas Intermediate crude futures contract. The Energy Information Administration last week said total U.S. crude oil stocks unexpectedly increased 2.6 million bbl to 458.0 million bbl during the week ended Sept. 4, nearly 28% above year-prior levels.

In its MOMR for September, Vienna-based OPEC secretariat adjusted its outlook for global oil demand higher for this year and lower in 2016 while downwardly revising non-OPEC supply for both years.

For 2015, OPEC expects world oil demand growth of 1.46 million bpd from 2014 to 92.79 million barrels per day, an upward revision of about 84,000 bpd due to better-than-expected demand from developed countries in Europe and America during the first six months of the year.

The year-on-year growth rate slows to 1.29 million bpd in 2016 for total demand of 94.08 million bpd, OPEC said, reflecting a downward revision of 50,000 bpd from its August report. The revision is due to "projected slower economic momentum in Latin America and China."

Last week, Goldman Sachs cut its crude oil price forecast, citing a supply overhang and slowing economic growth in China while the International Energy Agency on Friday projected supply and demand would come into better balance in the second half of 2016, faster than the agency forecast in August. IEA estimates the late August selloff in U.S. and international crude futures to six-year lows would accelerate production shut-ins by non-OPEC suppliers, primarily in the U.S., while also revising demand higher.

George Orwel can be reached at george.orwel@dtn.com