DTN Oil

WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange settled Tuesday's session sharply lower under pressure from a stronger U.S. dollar and concern over slowing global oil demand following softer-than-expected data out of China and the United States.

China's exports declined for the sixth consecutive month in October, dropping 6.4% from a year earlier as shipments into major trading partners in Europe and North America deteriorated further. China is an export-oriented economy that relies heavily on manufacturing exports. The decline in trade volumes underlined persistent external headwinds for Asia's economic growth and clouded the overall demand outlook for oil markets in the winter months.

The data showed China imported 13.52% more crude in October than a year ago, but the figure was flattered by coronavirus restrictions that were in place in 2022.

Weak macroeconomic data out of China offset pledges from Saudi Arabia and Russia to extend production cuts through the end of the year that gave an initial bounce to oil prices on Monday. In separate statements released Sunday, Saudi Arabia and Russia reaffirmed their commitment to continue with voluntary 1 million bpd production and 300,000 bpd export cuts, respectively, through the end of the year, adding that the "decision will be reviewed next month to consider extending the cut, deepening the cut, or increasing production."

Those actions come on top of 3.7 million bpd in production cuts previously agreed to by OPEC+. At their 35th OPEC and non-OPEC Ministerial Meeting held June 4, OPEC+ agreed to production quotas for all of 2024.

Further weighing on the oil complex, the U.S. dollar index rallied against a basket of foreign currencies to settle Tuesday's session at 105.373 as investors continued to reprice the path of the federal funds rate heading into next year. U.S. equities have rallied since last week's Federal Reserve decision to hold the federal funds rate in a 5.25%-5.5% target range for the second consecutive meeting as Chairman Jerome Powell appeared to suggest the end of the most aggressive monetary tightening campaign in two decades.

This view was further supported by a softer-than-expected October employment report, which showed job growth slowed markedly last month while the unemployment rate climbed, suggesting the labor market has more slack than previously thought.

At settlement, West Texas Intermediate December futures fell to $77.37 bbl, down $3.45, and the international crude benchmark Brent for January delivery declined $3.57 to $81.61 bbl. NYMEX December ULSD dropped back $0.1140 to $2.8384 gallon and front-month RBOB on NYMEX retreated to $2.1677 gallon, down $0.0682.

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