Oil Futures Gain on China Trade, Market Outlooks in Focus

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON, D.C. (DTN) -- Reversing some early week losses spurred by rising oil production in Norway, Libya, and the U.S. Gulf of Mexico, oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange advanced in early trade Tuesday following stronger-than-expected trade data out of China released overnight by the Customs Bureau, showing crude oil imports in the world's second largest economy rebounded sharply in September.

China's crude oil imports increased 5.5% from August's four-month low to 11.8 million barrels per day (bpd) in September, ending a two-month downtrend, customs data showed on Tuesday. The independent refining sector received 5.8% more crude last month at about 4.46 million bpd, compared with 4.22 million bpd in August, according to the estimates from S&P Platt's.

China is the major driver in the global demand recovery so far in the second half of the year, with regions within some major economies in western Europe and the United States reversing reopening plans and limiting mobility once again as governments attempt to halt the spread of COVID-19 infections.

In its World Oil Outlook released today, the International Energy Agency said energy demand in the United States and the European Union will likely never return to its pre-pandemic levels because of efficiency gains and a transition to remote work. Globally, however, energy demand will recover to last year level by 2023, with emerging markets accounting for an increase of 8 million bpd in the next decade. In 2020, the Paris-based agency forecast global oil demand would fall 8% as global air travel is set to post a 40% decline from 2019.

On the supply side, market participants are closely watching the quick return of production in the U.S. Gulf of Mexico after Hurricane Delta shut-in nearly all output from the Gulf waters last week. Shut-in offshore crude oil production fell to 69.4%, or 1.28 million bpd on Monday from 91%, or 1.68 million bpd on Sunday, said U.S. Bureau of Safety and Environmental Enforcement.

Onshore, Total SA restarted units at its 225,500 bpd Port Arthur, Texas, refinery on Monday that were shut by a Friday night power outage caused by Hurricane Delta, according to a company statement.

In early trade, November West Texas Intermediate futures advanced 72cts to trade just above $40 bbl at $40.15 bbl and ICE December Brent recovered 66 cents to $42.38 bbl, with both crude benchmarks shedding more than $1 in the prior session. NYMEX November ULSD futures added 1.5 cents to $1.1721 gallon and November RBOB futures gained 1.6 cents to $1.1917 gallon.

Liubov Georges