DTN Oil

WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Tuesday's session higher after the Organization of the Petroleum Exporting Countries reported its crude production declined in September and Chinese trade data showed a solid rebound in crude purchases last month, suggesting demand in the world's top oil importer is trending higher into the fourth quarter.

China's economy is projected to grow 1.8% this year, with economic output likely to surpass pre-crisis levels in the fourth quarter, according to the latest projections from the International Monetary Fund. China is the only major economy that is still on track to post growth this year even after the giant economy was besieged by draconian lockdown measures in the beginning of the year amid the COVID-19 pandemic.

Official customs data released overnight showed China imported 11.8 million barrels per day (bpd) of crude oil in September, up 5.5% from the previous month and nearly 17% higher compared to last year. S&P Platts analysts estimate the independent refining sector took 5.8% more crude last month at about 4.46 million bpd compared with 4.22 million bpd in August. The upbeat data out of China offset continued downward revisions to the global oil demand outlook by OPEC.

In its latest Monthly Oil Market Report released this morning, OPEC once again cut its 2020 oil demand forecast, projecting world consumption at 90.3 million bpd for an annualized drop of 9.5 million bpd, while next year demand figures were revised down to 96.8 million bpd, still well below the pre-crisis level above 100 million bpd. OPEC said the modest revisions of 60,000 bpd this year and 80,000 bpd in 2021 were due to lower than expected summer demand for transportation fuels in the United States and parts of Europe.

U.S. gasoline demand over the 4-week period through Oct. 2 averaged 8.604 million bpd, down 9% against the comparable 4-week average last year. Recovery in U.S. gasoline demand has been hobbled by a high unemployment rate, with the labor market still reeling from the pandemic-induced collapse in the spring.

Even still, economic growth in the United States and European Union seemed to have picked up faster-than-expected in the third quarter, with U.S. Gross Domestic Product seen contracting at a softer pace of 4.4% this year versus 8% seen in IMF's previous forecast.

OPEC reported its output fell by 50,000 bpd to 24.11 million bpd in September, more than 100% compliance with supply cut pledges, with most of the decline from the United Arab Emirates, down a steep 239,000 bpd.

OPEC+ ministers will review quota compliance with their joint 7.7 million bpd production agreement on Thursday-Friday (10/15-16).

At settlement, November West Texas Intermediate futures advanced 77 cents to just above $40 barrel (bbl) at $40.20 bbl and ICE December Brent recovered 73 cents to $42.45 bbl. NYMEX November ULSD futures added 1.19 cents to $1.1690 gallon and November RBOB futures gained 0.7 cents to $1.1827 gallon.

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

(c) Copyright 2020 DTN, LLC. All rights reserved.