China concerns push WTI below $70 as US inventories drive rebound
Hurricane risks were exaggerated
WTI falls below $70.00 but quickly recovers above this level as U.S. refineries are set to operate above 90% capacity due to low inventories
On Monday, November 11, in the morning hours, the price of West Texas Intermediate (WTI) oil dropped to $69.90 as the market reacted to Friday’s announcement of a Chinese economic stimulus package, which disappointed investor expectations.
The package aimed at supporting economic growth and encouraging the reduction of local budget debt by 10 trillion yuan does not include direct economic stimulus measures. The latest published statistics also present deflationary risks.
For instance, China’s Consumer Price Index (CPI) in October grew by 0.3% year-on-year, slightly below market expectations and September’s 0.4%. On a monthly basis, the CPI decline was sharper than anticipated.
Meanwhile, producer prices fell by 2.9% year-on-year, a more pronounced drop than the previous month's 2.8% decrease.
The decline in prices was also influenced by data showing a 9% drop in China’s crude oil imports in October, marking the sixth consecutive month of declines compared to the previous year.
Hurricane risks were exaggerated
At the same time, the risks associated with reduced oil production in the Gulf of Mexico due to Hurricane Rafael were exaggerated, contributing to a 3.5% drop in WTI oil prices compared to last Friday.
However, further declines were halted by trader concerns, as Donald Trump is expected to tighten sanctions against OPEC+ members Iran and Venezuela, which could lead to reduced oil supplies to global markets.
In addition, U.S. refineries are expected to operate at around 90% of their crude oil processing capacity due to declining inventories.
Meanwhile, Saudi Aramco, Saudi Arabia’s largest state-owned oil company, reported a 15% drop in quarterly profits. This increases the likelihood that Saudi Arabia will push for OPEC+ to extend oil production restrictions.
