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Oil steady after US dollar sell-off, Opec and China weigh
[LONDON] Oil prices steadied on Tuesday after a heavy sell-off following a surge in the US dollar, and weighed down by signs of weaker demand in China, the world's second-largest consumer.
Benchmark Brent crude was down 15 US cents at US$50.58 a barrel by 1015 GMT. US light crude was 5 US cents lower at US$47.54.
Chinese oil refineries operated in July at their slowest daily rates since September, official data showed. The drop was steeper than expected, raising concerns over the state of Chinese demand and the level of domestic stocks.
Ample supply from big oil exporters, including members of the Organization of the Petroleum Exporting Countries and the United States, also encouraged investors to sell long positions bought in July during a period of rising prices, analysts said.
Brent and US crude both reached two-month highs in early August but have fallen in the last few days, with falls accelerating on Monday.
"The focus remains on Opec, US inventories and disappointing China demand," said Hans van Cleef, senior energy economist at Dutch bank ABN Amro in Amsterdam. "Those concerns have triggered profit taking after a strong run-up in July."
The US dollar rallied on Tuesday on an easing of tensions around North Korea. A stronger US dollar tends to limit demand for oil for buyers paying in other currencies.
The US dollar index, which measures its strength against a basket of six major currencies, climbed 0.4 per cent on Monday and was up 0.3 per cent on Tuesday.
An announcement by the Nigerian subsidiary of Royal Dutch Shell that it had lifted a force majeure on Bonny Light crude exports also added to the market surplus.
US crude stockpiles likely fell for a seventh consecutive week, along with a probable fall in distillate and gasoline inventories, a preliminary Reuters poll showed.
The weekly US crude inventory report from industry group the American Petroleum Institute was due to be published later on Tuesday. Official US government statistics will be released on Wednesday.
Efforts by Opec and other producers to limit output have helped lift Brent past US$50 a barrel, but production elsewhere, particularly in the United States, has undermined prices.
US shale oil production is expected to grow for a ninth consecutive month in September to 6.15 million barrels per day, the US Energy Information Administration said on Monday.