Oil Incurs More Losses As Chinese Demand Suffers Under Zero Covid Policy

Ritterbusch says oil will plummet even further this week: File Image/Pixabay

Indifferent demand in China and a strong U.S. dollar were said to be the reasons for oil prices incurring another round of declines on Monday, although the losses were minimal as expected for a commodity in range-bound status.

Brent settled down 24 cents at $93.26 per barrel, while West Texas Intermediate dropped 47 cents to settle at $84.58 per barrel after it was reported that  China's September crude imports of 9.79 million barrels per day (bpd) were 2 percent below a year earlier, according to customs data.

ANZ analysts pointed out that the nation's independent refiners failed to utilize increased quotas due to  ongoing Covid-related lockdowns imposed by a government that continues to pursue the impossible via its zero-tolerance infection policy.

Also, the U.S. dollar climbed following another suspected foreign exchange intervention by Japan, and this prompted Jim Ritterbusch, president of Ritterbusch and Associates, to say that "Further dollar strength would weigh on WTI values with a test of our expected downside at the $79.50 mark likely by week's end."

Minimizing Monday's losses were reports that U.S. business activity contracted for a fourth straight month in October, due to weaker client demand.

In other oil related news on an unusually slow news Monday, The New York Times weighed in on the Organization of the Petroleum Exporting Countries (OPEC) slashing output by 2 million bpd and the inability of Washington to do anything about it, stating that "For decades, the Saudi royal family has used the image of a close relationship with the United States to help legitimize and strengthen its rule; the Biden administration can affect Saudi oil policy by showing the royal family that it is in danger of losing that image.

"Mr. Biden could publicly halt, delay or interfere with the sale of American military equipment to Saudi Arabia, as various members of the House and the Senate have demanded."

But the newspaper concluded that "don't count on Washington imposing costs on Saudi Arabia: American consumers won't benefit, and the Washington establishment won't realize any political gains from upsetting the status quo."