Oil rises on weak U.S. business activity, but Chinese demand data weighs

NEW YORK, Oct 24 (Reuters) – Oil prices edged higher in choppy trade on Monday, as weak U.S. business activity data eased expectations for more aggressive interest rate hikes, while data showing still-low Chinese demand in September capped prices.

Brent crude futures for December settlement rose 55 cents, or 0.6%, to $94.05 a barrel at 10:39 a.m. ET (1439 GMT), after rising 2% last week. U.S. West Texas Intermediate crude for December delivery rose 55 cents, or 0.7%, to $85.60 a barrel. Both benchmarks were down $1 a barrel earlier in the session.

China imported 9.79 million bpd of crude in September, customs data showed on Monday, down 2% from a year earlier, as independent refiners held back amid thin profits and sluggish demand throughput.

“The recent recovery in oil imports faltered in September,” analysts at ANZ said in a note, adding that independent refiners have failed to take advantage of increased oil prices as ongoing COVID-related lockdowns weighed on demand. quota.

Uncertainty over China’s zero-coronavirus policy and the property crisis are undermining the effectiveness of growth-boosting measures, despite stronger-than-expected third-quarter gross domestic product growth, ING analysts said in a note.

Oil prices recovered some lost ground after data showed U.S. business activity contracted for a fourth straight month in October, with both manufacturers and service companies reporting weak customer demand in monthly surveys of purchasing managers.

positive signal

S&P Global said on Monday that the U.S. Composite PMI output index, which tracks manufacturing and services, fell to 47.3 this month from a final reading of 49.5 in September.

Phil Flynn, an analyst at Price Futures Group, said the weakness could indicate that the Fed’s rate hikes to fight inflation have been in play and could persuade it to slow rate hikes, a positive sign for fuel demand.

“The absence of PMI data suggests the economy may be slowing, and the results are proving bullish,” Flynn said.

Brent crude rose last week despite an announcement by U.S. President Joe Biden to sell the remaining 15 million barrels of oil in the U.S. Strategic Petroleum Reserve, part of a record 180 million barrel release that began in May.

Biden added that his goal is to replenish inventories when U.S. crude prices hit around $70 a barrel.

But Goldman Sachs said the stock release was unlikely to have a significant impact on prices.

“Such a release could have only a modest impact on oil prices (<$5/bbl)," the bank said in a note.

U.S. energy companies added oil and gas rigs for the second week in a row last week, as relatively high oil prices encouraged companies to drill more, energy services firm Baker Hughes said in a report.

Additional reporting by Noah Browning and Florence Tan; Editing by Jan Harvey and David Holmes

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