Oil prices steady as China oil imports rise by 8.7 percent
LONDON: Crude prices steadied not far from seven-year lows on Tuesday as China reported strong commodity imports despite economic weakness, though global oversupply compounded by OPEC’s decision to keep output high led analysts to predict further weakness.
Benchmark Brent and WTI futures both fell more than 6 percent the previous session to reach 2015 lows and are close to levels last seen during the credit crunch of 2008/09. Brent futures were up 54 cents at $41.27 a barrel by 1050 GMT (0550 EDT). US crude was trading at $37.94 a barrel, up 29 cents from its last settlement, though still close to the seven-year lows of the previous session.
“It’s a dead-cat bounce. When you get a decline like you saw yesterday, you’re going to get a rebound,” said Michael Hewson, chief market analyst at CMC Markets.
“But OPEC has lost control of the oil market and unless something fundamental changes that causes demand to overtake the oversupply in the market, the path of least resistance is the 2008 lows of $35-$38.”
On the demand side, China’s appetite for cheap oil was helping to support prices as the government looks to build up strategic reserves.
China’s crude oil imports for the first 11 months of the year rose 8.7 percent to 6.61 million barrels per day, with November crude imports growing 7.6 percent from the same month a year ago. China’s November sales of new vehicles jumped 17.6 percent over the same period. With crude prices near record lows, China is seen as likely to double its strategic oil purchases in 2016, adding 70-90 million barrels to its strategic petroleum reserves (SPR).
Saudi Arabia is shipping more crude oil to Asia over the last two months of the year as strong refining margins boost demand, trade sources said, helping the top oil exporter to defend market share amid fierce competition.