ING Global Economics Team
ING Economic and Financial Analysis
Chinese data continues to point towards weaker domestic oil demand. Despite this, oil prices are trading stronger this morning
Energy – Weak Chinese Oil data
Oil prices are trading stronger in the early morning session in Asia today despite weaker-than-expected data out of China over the weekend. The oil-specific numbers were also weak. Chinese refiners processed around 12.6m b/d of crude oil in August, down almost 10% MoM and 17.5% lower YoY. The numbers suggest that apparent oil demand fell below 12.5m b/d, down more than 15% YoY and to its weakest level since August 2022. The numbers also indicate that crude oil inventories in China built at a pace of around 3.2m b/d in August, the largest monthly build in Chinese crude oil inventories going as far back as 2015.
Demand fears have left speculators increasingly bearish towards the oil market. The latest positioning data shows that speculators sold 54,325 lots in ICE Brent over the last reporting week, leaving them with a net short of 12,680 lots, the first time speculators have held a net short in Brent. The move was driven by a combination of longs liquidating and fresh shorts. The gross long fell by 33,861 lots over the week, while the gross short increased by 20,464 lots.
The latest data from Baker Hughes shows that the US oil rig count increased by 5 over the last week to 588, the highest level since June. However, it is unlikely that this momentum will be maintained given the recent weakness in the market. While spot WTI prices are trading just below $69/bbl, forward prices are even less attractive for US producers with calendar 2025 and 2026 prices trading at around $66 and sub-$65/bbl respectively.
There is little on the energy calendar for this week. Instead, broader markets, including commodity markets will be focused on the upcoming FOMC meeting on Wednesday. While a cut is priced in, the uncertainty is whether we get a 25bp or 50bp cut. A 50bp cut could be slightly bearish for oil as it may raise recession fears.
Read the original analysis: The commodities feed: Chinese oil demand falls
Content disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more here: https://think.ing.com/content-disclaimer/
Recommended Content
Editors’ Picks
AUD/USD consolidates around mid-0.6700s amid cautious mood ahead of FOMC meeting
AUD/USD consolidates the overnight strong gains and oscillates around mid-0.6700s, as traders move to the sidelines ahead of a two-day FOMC meeting starting this Tuesday. Heading into the central bank event risk, the USD languishes near the 2024 low amid bets for an oversized rate cut by the Fed.
USD/JPY remains on the defensive below 141.00 as bets firm on jumbo Fed rate cut
The USD/JPY pair recovers some lost ground near 140.80, snapping the five-day losing streak during the early Asian session on Tuesday. However, the upside of the pair might be limited amid the growing expectation that the US Federal Reserve will start its easing cycle at the September meeting.
Gold price consolidates near all-time peak, looks to Fed before the next leg up
Gold price is seen oscillating in a narrow trading band during the Asian session on Tuesday and consolidating its recent gains to a fresh all-time peak, around the $2,589-2,590 region touched the previous day.
MicroStrategy plans to buy additional Bitcoin following $700 million convertible notes sale
MicroStrategy plans to increase its Bitcoin holdings after announcing a $700 million convertible senior notes offering on Monday. The announcement follows its $1.11 billion Bitcoin purchase.
Five Fundamentals for the week: Fed overtowers pivotal week for Gold, stocks and the US Dollar Premium
The Fed's first rate cut stands out as economic uncertainty mounts. US Retail Sales and Jobless Claims are of high interest. Rate decisions by central banks in the UK and Japan are also pivotal.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.