Oil prices dip on weak Chinese refining activity

Data shows domestic refineries processed 0.4% more crude in July

Oil prices dipped on Monday as a slowdown in Chinese refining activity growth cast doubts over its crude demand outlook, while rising US shale output suggested supplies would likely remain high.

Brent crude futures LCOc1, the international benchmark for oil prices, were at $ 51.84 per barrel at 4: 46 am ( US time), down 26 cents, or 0.5 percent, from their last close.

US West Texas Intermediate crude futures CLc1 were at $ 48.59 a barrel, down 2 cents, or 0.41 percent.

Chinese refineries processed 0.4 percent more crude oil in July than a year earlier at 45.5 million tons, or about 10.71 million barrels per day ( bpd), data from the National Bureau of Statistics showed on Monday.

This would be the lowest amount on a daily basis since September 2016.

“Runs were slightly below our expectations, as fuel de- mand growth remained tepid and stocks were brimming,” said Harry Liu, a downstream consultant with IHS Markit.

Despite the possible slowdown in China, the International Energy Agency said on Friday that it expects 2017 oil demand growth to be 1.5 million bpd, up from a previous expectation of 1.4 million bpd.

Overall, markets remain well supplied thanks to strong output.

“Demand is outperform- ing expectations amongst both developed and emerging markets... However, global crude inventories remain bloated and there are considerable uncertainties heading into 2018,” BMI Research said in a note, including the possibility of rising supplies.

Shale production in the largest US oilfield should rise by as much as 300,000 bpd by December, according to industry forecasts.

Oil production from the Permian Basin of West Texas and New Mexico is being closely watched because its low costs and rapid growth have pressured efforts by the Organization of the Petroleum Exporting Countries to drain a global crude supply glut.

US energy companies’ pace of adding oil rigs has slowed in recent months as firms cut spending plans in reaction to declining crude prices.