DTN Weekly Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures closest to expiration on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange steadied Monday morning as crude oil supply outages in Libya and the Gulf of Mexico balanced bearish demand signals out of China.

The Libyan export halt and Hurricane induced production disruptions in the Gulf of Mexico together have removed more than a million bpd of crude oil supply from the market. Against the backdrop of ample global spare production capacity and darkening demand growth outlooks, however, the price reaction to these supply disruptions remained tame.

Data released by the National Bureau of Statistics of China on Friday showed both domestic consumption and industrial output in August trailing expectations, with retail sales growing 2.1% year-on-year and industrial production recording the slowest growth rate since March at 4.5%. Official data also showed crude oil processing volumes in August were unchanged from July, with the 9.5% year-on-year drop marking the fifth consecutive monthly decline in Chinese refinery throughput. Crude oil imports arriving at the fastest monthly pace in more than a year amid low processing rates implied rapidly expanding inventories, providing a cushion for refiners should prices rise.

Market participants are hoping for some price support from lower U.S. interest rates after this week's FOMC meeting. According to CME's FedWatch Tool, investor expectations are now leaning toward a 50-basis point cut over 25 points by a 2:1 margin at the September 18 meeting, the inverse from last week.

Near 08:00 AM ET, WTI futures for October delivery were trading near $69.21 bbl, up $0.56, and Brent for November delivery hovered around $72.10 bbl, up $0.49. October RBOB gained $0.0207 gal to $1.9509, while front month ULSD dropped $0.0072 gal to $2.0771.

Karim Bastati can be reached at karim.bastati@dtn.com