Oil Futures Reverse Up Early Tuesday

WASHINGTON, D.C. (DTN) -- New York Mercantile Exchange nearest delivered oil futures and Brent crude on the Intercontinental Exchange reversed higher Tuesday morning following reports of surging Chinese crude oil imports and efforts by Beijing to boost its economy following Monday's decline on concerns over a broader slowdown in the world's second largest economy.

Nymex February West Texas Intermediate futures gained $1.27 to trade at $51.78, while ICE March Brent registered a $1.26 gain to $60.25 per barrel (bbl). Nymex February ULSD futures advanced more than 1.0 cents to $1.8629 gallon and February RBOB futures gained 3.48 cents to a $1.3986 a gallon.

After retreating for two straight sessions, oil futures were boosted by reports China has resumed crude oil and soybean purchases from the United States in December. Reuters reported that three cargos carrying crude from the Gulf Coast were in route to Chinese ports following a 90-day truce reached between the United States and China at the start of December.

According to data released by the General Administration of Chinese Customs December shipments into China, the world's top crude oil buyer, were 43.78 million bbl, a 30% increase from the previous year. Crude oil imports for 2018 averaged 9.24 million bpd, up 10% on an annualized basis, showing no signs of a slowdown in China's fuel demand.

On Monday, oil futures came under pressure by overall weakness in the latest Chinese customs data, which detailed slowing trade. Trade figures show China's exports fell by an unexpected 4.4% in December year-on-year, while imports dropped 7.6% against December 2017 versus an expected 8.0% increase. Earlier in the month, China's Caixin Purchasing Managers Index showed its manufacturing sector contracted for the first time in 19 months.

These are just the latest signposts suggesting that the negative impact of the trade war with the United States may be greater than Chinese authorities previously estimated. According to wire reports, Beijing intends to introduce a stimulus economic package in 2019, which will include easing monetary policy and tax cuts to bolster its economy. Investors will remain focused on economic data coming from China and any signs of progress in trade talks with the United States.

Oil traders will also get a glimpse at the federal governments' expectations for world oil supply and demand for this year, with the Energy Information Administration to release its Short-term Energy Outlook today. 2019 outlooks will also be release on Thursday by the Organization of the Petroleum Exporting Countries and on Friday by the International Energy Agency. Tuesday afternoon, the American Petroleum Institute will issue U.S. oil supply data for the week-ended Jan. 11.

Liubov Georges can be reached at liubov.georges@dtn.com

(CZ)