BLBG: Oil Declines as Chinese Refinery Demand Growth Slows to Least in 18 Months
Crude declined as China’s oil processing grew the least in 18 months after government measures to cool the economy reduced fuel consumption.
Oil slipped as much 1.4 percent following data from China Mainland Marketing Research Co. that showed refineries in the world’s biggest energy-consuming country processed about 8.5 million barrels a day in September. That’s a 6.6 percent gain from a year earlier and the smallest increase since March 2009.
“The Chinese numbers didn’t knock the socks off of oil traders,” said Phil Flynn, vice president of research at PFGBest in Chicago. “You’ve got a China demand premium built into the oil price. The disappointing numbers overnight, together with slower GDP growth, higher inflation and higher interest rates, are putting a damper on bullish sentiment.”
Crude oil for December delivery fell 33 cents, or 0.4 percent, to $82.21 a barrel at 10:31 a.m. on the New York Mercantile Exchange.
Brent crude oil for December settlement declined 9 cents to $83.51 a barrel on the London-based ICE Futures Europe exchange.
The Chinese economy grew 9.6 percent in the third quarter and inflation accelerated to the fastest pace in almost two years. Consumer prices jumped 3.6 percent in September from a year earlier, the statistics bureau in Beijing said today.
The expansion in China’s gross domestic product is down from 10.3 percent in the second quarter and 11.9 percent in the first three months of the year.
Focus on Fundamentals
“We’re starting to see a bit more of a focus on the fundamentals of the market,” said Michael Fitzpatrick, a broker with MF Global in New York. “We’ve traded with the stock market and the dollar lately, but those correlations are staring to break down.”
The U.S. currency dropped against the euro for a second day. The dollar slipped 0.2 percent to $1.4001. The correlation between movements in oil versus the euro has been 0.73 over the past year, where a perfect correlation is 1. Raw materials can become more attractive as an alternative investment as the dollar declines.
The Standard & Poor’s 500 index rose 0.8 percent to 1,187.75 and the Dow Jones Industrial Average increased 0.8 percent to 11,197.88.
To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.
