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Weak Chinese Data, Rising US Dollar Fuel Oil Sell-Off

August 15, 2017 at 16:32 by Andrew Moran

Oil futures are trading lower for the second straight session as weak Chinese data and a rising US dollar are fueling a sell-off by investors. Despite crude prices climbing higher this month, oil is on track for a two-session losing skid.

September West Texas Intermediate (WTI) futures tumbled $0.19, or 0.40%, to $47.40 per barrel at 16:16 GMT on Tuesday on the New York Mercantile Exchange. This comes as US crude slipped 2.5% on Monday to settle at its lowest level since June 24.

Brent, the international benchmark for oil prices, is also bleeding red ink. October Brent crude futures fell $0.23, or 0.45%, to $50.50 a barrel on London’s ICE Futures exchange.

The decline in oil prices stems from a new report that found Chinese oil refineries operated in July at their slowest daily rates in nearly a year. The official government data pointed to a bigger decrease than initially projected, which causing some investors to fear a paucity of demand and rising stockpiles.

International oil supplies are likely to continue their surplus after the Nigerian subsidiary of Royal Dutch Shell announced it was removing a force majeure on Bonny Light crude exports.

The market is bracing for increases in production levels as the US Energy Information Administration (EIA) is scheduled to release its weekly report on Wednesday. The EIA did publish its monthly report, which discovered that shale crude-oil output is expected to witness a monthly jump of 117,000 barrels per day (bpd) to 6.149 million bpd next month. This year, shale-oil production has gone up every month.

According to S&P Global Platts survey data, analysts prognosticate that crude supplies will have plunged 3.6 million barrels last week. Experts also think gasoline stockpiles will drop 400,000 barrels, while distillate stocks will fall by 700,000 barrels.

Oil was further impacted by a rising US dollar as the greenback surged 0.41% on Tuesday. A stronger dollar is bad for commodities like oil because it makes it more expensive for foreign investors to buy.

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