- Oil trades lower amid concerns about an economic slowdown and weaker demand
- WTI lost most of last week’s gains to trade around $83/Bbl
- China's strict Covid-zero policy continues to weigh on the market amid anticipation of weaker fuel demand
- The USD Index (DXY – a proxy for U.S. Dollar strength against a basket of other international currencies) is near its 20-year high this morning
- An expensive dollar (DXY Index) can cause foreign buyers of dollar-denominated commodities to pay more for the same amount of goods
- China continues to see economic uncertainty as the third quarter's economic data indicated a mixed recovery (BBG, Reuters)
- China’s economic activity is important as it is the world’s largest crude importer
- GDP rose to +3.9% in the third quarter of this year, up from almost unchanged growth in the 2Q22, when Shanghai and other major cities were under lockdown
- However, GDP growth is still below pre-Covid levels as China’s strict Covid-zero policy continues to have an adverse effect on economic growth and demand
- Crude processing and oil imports increased last month as a result of refineries' return from seasonal maintenance
- Chinese crude imports for September were 9.8 MMBbl/d in September, up from 9.5 MMBbl/d in August but still 2% below levels from 2021 as private refiners continue to limit production
- Crude processing was 13.88 MMBbl/d, up 9% from a month earlier, the highest level since February
- Exports rose to a 15-month high of 0.430 MMBbl/d in September, up 36% year-over-year after the country released new fuel export quotas late last month
- U.S. officials may seek to cap the price of Russian oil exports over $60/Bbl, a higher level than previously indicated (BBG)
- Treasury Secretary Janet Yellen and her deputy, Wally Adeyemo, have consistently cited historical pricing for Russian oil as a guide for establishing the cap
- According to Argus Media, the average delivery price for Urals crude, a major Russian export, was $63/Bbl over the past three years
- Earlier discussions on the plan, devised by the U.S. Treasury Department as part of the larger international response to President Vladimir Putin's invasion of Ukraine, focused on a ceiling in the $40 to $60 range