Oil Futures Rangebound Ahead of JMMC Meeting, China Data
WASHINGTON (DTN) -- In early trade Monday, nearby delivery month oil futures on the New York Mercantile Exchange and the December Brent contract on the Intercontinental Exchange slipped despite a weaker U.S. dollar index and rising equities as investors reacted to economic data out of China released overnight by the National Bureau of Statistics and Monday's technical meeting among oil ministers from the Organization of the Petroleum Exporting Countries and Russia-led partners.
The market expects no change will be made to the group's ongoing 7.7 million barrels per day (bpd) supply cut agreement when the ministers meet Monday for their monthly Joint Ministerial Monitoring Committee (JMMC) meeting but will be on the lookout for clues on expected action. Last week, a technical panel for OPEC+ found compliance with the deal was 103% in September, driven mainly by improved adherence with the quotas from laggard members Iraq, Nigeria and the United Arab Emirates.
OPEC+ producers are expected to again discuss weakening demand fundamentals in light of surging coronavirus cases in the European Union and the United States as well as rising production out of Libya following a breakthrough in peace talks between opposition forces led by General Khalifa Haftar and the United Nations recognized government in Tripoli.
Against this backdrop, OPEC+ will consider at their Nov. 30-Dec. 1 biannual meeting on whether to stick with their current production agreement that reduces the output cut to 5.7 million bpd on Jan. 1, 2021.
The coronavirus pandemic continues to dominate media, as several countries in the European Union tighten mobility restrictions to halt the spread of the deadly virus. Oxford University found in research published Monday that patients infected with the virus continue to experience symptoms months after diagnosis with persistent inflammation in vital organs.
The fresh wave of infections across major economies threaten to further dampen global demand and slow an economic recovery.
In its latest outlook, the International Monetary Fund estimates China to be the only major economy to post growth this year, with economic output likely exceeding pre-crisis levels. Data from China released overnight showed its economy grew at 4.9% in the third quarter, below expectations for a 5.2% expansion rate.
China's major economic indicators improved in September with industrial production rising 6.9% year-on-year and retail sales climbing 3.3% on the month, beating economist projections for 1.7% growth. Official customs data published last week showed China imported 11.8 million bpd of crude oil in September, up 5.5% from the previous month and nearly 17% higher than last year.
In early trading, November West Texas Intermediate futures slipped to trade near $40.70 barrel (bbl) , with December WTI trading at a 25-cent premium to November delivery ahead of the contract's expiration Tuesday afternoon. The December Brent contract on ICE eased to trade near $42.75 bbl. NYMEX November ULSD futures declined a little more than 1 cent to $1.1680 gallon and November RBOB futures traded 0.95 cent lower at $1.1593 gallon.
The U.S. Dollar Index, which trades against a basket of six global currencies, weakened 0.45% to 93.270.
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