MARKET WATCH: NYMEX crude up on recovering Chinese oil demand

Oil prices bounced back up $1/bbl on the New York market Nov. 20 on indications that Chinese oil demand might be recovering.

Oil prices bounced back up $1/bbl on the New York market Nov. 20 on indications that Chinese oil demand might be recovering.

Barclays issued a research note saying much of the recent collapse in global oil demand stems from China where recent oil demand data has been the weakest since the early 1990s.

Year-on-year growth rate for Chinese implied oil demand since August has averaged 4.4%, which is in contrast to the -0.6% seen in the Jan–August period, Barclays said.

On Nov. 21, a central Chinese bank said it would lower its interest rates slightly, spurring hopes of increased oil demand. The unexpected move by the People’s Bank of China apparently was a response to China’s weak economic activity.

Any stimulus for the Chinese economy helps all kinds of commodity markets, oil included, Andrew Lebow, senior vice-president for energy derivatives at Jefferies Bache LLC, told the Wall Street Journal.

With lower interest rates, the Chinese could spend enough to support 100,000 b/d of oil demand growth in 2015 in a best-case scenario, he said.

The Energy Information Administration estimated working gas in storage was 3.59 tcf as of Nov. 14.

The weekly gas storage report for gas stored underground across the Lower 48 marked a 17 bcf net decline from Nov. 7. Stocks were 201 bcf less than last year at this time and 244 bcf below the 5-year average of nearly 3.84 tcf.

Energy prices

The New York Mercantile Exchange December crude oil contract gained $1 on Nov. 20, closing at $75.58/bbl. The January 2015 contract gained $1.35 to $75.85/bbl.

The natural gas contract for December increased 11.8¢ to a rounded $4.49/MMbtu. The cash gas price at Henry Hub, La., was $4.41/MMbtu, increasing 2¢.

Heating oil for December delivery was up 2.1¢ to a rounded $2.38/gal. Reformulated gasoline stock for oxygenate blending for December delivery edged down 1.62¢ to a rounded $2.03/gal.

The January 2015 ICE contract for Brent crude oil rose $1.23 to $79.33/bbl. The February 2015 contract rose $1.17 to $79.74/bbl. The ICE gas oil contract for December fell $1.75, settling at $695.75/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Nov. 20 was $74.03/bbl, edging down just 2¢.

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