China’s official Purchasing Managers’ Index (PMI) was slightly improved this month, increasing from 49.5 in August to 49.8 in September, but remained below the 50-point mark that separates expansion from contraction on a monthly basis, data from the National Bureau of Statistics showed. China, the world’s largest crude importer, warned of instability in international markets from any “decoupling” of China and the United States, after sources said U.S. President Donald Trump’s administration was considering delisting Chinese companies from U.S. stock exchanges. “The U.S. and China are still far from any type of agreement. The concern is oil demand is not going to be there,” said Kyle Cooper, an oil analyst at IAF Advisors.
Saudi Aramco last week restored full capacity to the level before the attacks on its oil facilities, Ibrahim Al-Buainain, chief executive officer of its trading arm, said on Monday at a conference in the United Arab Emirates. The world’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day (bpd) after the attack knocked out 5.7 million bpd of the kingdom’s output, sources told Reuters last week, though Saudi Aramco has yet to confirm its operations have been restored fully. The “much quicker than expected return of Saudi oil (supply) as we go into refinery maintenance season” was weighing on prices, said Andy Lipow, president of Lipow Oil Associates in Houston.
Market fears of broader escalating tensions in the Middle East after Saudi Arabia and the United States blamed the attacks on Iran, have also faded somewhat, easing upward pressure on prices, analysts said. Saudi Arabia’s Crown Prince Mohammed bin Salman, often referred to as MBS, said in an interview broadcast on Sunday he would prefer a political solution to a military one in response to attacks. But he warned oil prices could spike to “unimaginably high numbers” if the world does not come together to deter Iran. Money managers cut their net long U.S. crude futures and options positions in the week to Sept. 24, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. “As long as peace breaks out in the Middle East, we’ll see oil continue to trade lower,” said Robert Yawger, director of energy futures in New York.
Oil prices are likely to remain steady this year, a Reuters survey showed, with supply shocks such as the attack on Saudi Arabia countering flagging demand. Analysts forecast that Brent crude would average $65.19 a barrel in 2019 and WTI $57.96.
