Oil futures: Crude edges higher, China stimulus seen underpinning demand
Quantum Commodity Intelligence - Crude oil futures Monday were cautiously higher as markets found support on expectations that China would take measures to boost economic growth, while ongoing refinery strikes in France continued to underpin distillate values.
Front-month December ICE Brent futures were trading at $92.14/b (1740 GMT), compared to Friday's settle of $91.63/b.
At the same time, Nov22 NYMEX WTI was trading $86.09/b versus Friday's settle of $85.61/b. The more-liquid Dec22 contract was at $85.14/b, versus the previous close of $84.65/b
Both benchmarks retreated by around 6.5% last week, reversing around half of the OPEC-led gains from the previous week.
Oil traders were eyeing the 20th National Congress of the Chinese Communist Party, the outcome of which matters for the political and economic outlook of the country, particularly with regards to economic stimulus that would boost oil demand.
"Beijing should provide more economic stimulus, focusing on supporting consumption rather than investing. Oil should run with that," said Stephen Innes, managing partner SPI Asset Management.
However, traders have voiced concerns over the broader outlook for China as it maintains a "zero-Covid" policy, leading to regular lockdowns and the subsequent drop in industrial output along with faltering supply chains.
In Europe, French refinery and fuel depot workers at five sites owned by oil major TotalEnergies have extended their strike, union leaders said over the weekend, compounding concerns over diesel supplies ahead of wider protests expected this week.
Gasoil margins versus Brent for cargoes delivered into Europe were pegged at around $70/b for non-Russian diesel on Friday, only slightly down on the week, but backwardation widened due to the short-term supply crunch.
Prices also found support as the Dollar Index retreated towards 112 points, down around 1% on the day.
The latest positioning data revealed that speculators increased net longs in ICE Brent by 15,831 lots over the last reporting week to leave them with a net long of 201,163 lots as of last Tuesday, which analysts said likely reflects the market's initial reaction to the OPEC+ decision earlier this month.
Meanwhile, oilfield services firm Baker Hughes reported that North American drilling activity increased for the fourth time in five weeks during the week ending October 14.
The total weekly rig count was up by seven units to 769, with the number up 226 from the 543 at the same time in 2021 and the highest volume since March 2020.
