China’s crude oil output fell nearly 10 percent in August from a year ago to the lowest in more than six years, data from the statistics bureau showed, as low prices continue to plague major producers.
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Futures dropped as much as 1.6 percent in NY after gaining 0.9 percent Monday. Rigs targeting crude rose for a second week to 414, the most since February, according to data from Baker Hughes Inc. After projecting a drop in non-OPEC supply next year in the last few months, the cartel now sees a 200,000 bpd increase. Equity markets in Europe and Asia dropped the most since the aftermath of the Brexit vote in June amid concern about the end of central bank stimulus.
Oil has fluctuated since rallying in August amid speculation the Organization of Petroleum Exporting Countries and Russian Federation would agree on measures to stabilize the market later this month.
A possible explanation may be that traders interpreted the announcement in the context of speculation that OPEC producers might agree to an output freeze at an informal meeting in Algiers this month. That would be the biggest gain since the week ended April 8. Saudi Arabia, the de-facto leader, has persuaded OPEC to continue pumping despite a price collapse to ensure it doesn’t lose market share to higher cost producers in places like the U.S.
Following Brainard s speech at the Chicago Council on Global Affairs, Fed futures prices showed an 85 percent probability that the current target rate of 0.25-0.5 percent will remain unchanged following next week s meeting, up from 76 percent Friday. “We’re still in the middle of a $43 to $48 range”. Near-term support is now at 44.20, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis exposing the 50% level at 42.73.
At around 0330 GMT today, United States benchmark West Texas Intermediate dipped 40 cents to Dollars 45.89 and Brent fell 34 cents to USD 47.98. Total volume traded was about 35 percent above the 100-day average.
Brent crude futures were trading at $47.67 per barrel at 0639 GMT, down 65 cents, or 1.4 per cent, from their last settlement. The global benchmark crude traded at a $1.59 premium to WTI for November delivery.
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It came after data from industry group Baker Hughes showed the number of active USA oil rigs rose by seven to 414 last week. (Primary sources were particularly contrary this month, with a huge increase of 185,900 bpd of production from Nigeria, compared to secondary showing a drop). The revision is mostly due to Kashagan, OPEC said, as the long-delayed giant field finally starts up.
