Oil dips on falling Chinese crude

Brent futures LCOc1, WTI crude CLc1 both down

Oil markets dipped on Wednesday as Chinese crude imports fell to their lowest level in a year, although traders said that overall markets remained well supported largely due to supply cuts lead by the Organization of the Petroleum Exporting Countries (OPEC).

Traders said the market was eyeing growing tensions in the Middle East with concern, keeping a cautious tone on trade.

Brent futures LCOc1, the international benchmark for oil prices, were at $63.38 per barrel as of press time on Wednesday, down 31 cents, or 0.5 percent, although still not far off a near two-and-a-half year high of $64.65 a barrel reached earlier this week.

US West Texas Intermediate crude CLc1 was at $56.89 per barrel, down 31 cents, or 0.5 percent, from their last settlement, but also still not far off the $57.69 a barrel mark reached earlier this week, the highest since July 2015.

China’s October oil imports fell sharply from a near record-high of about 9 million barrels per day (bpd) in September to just 7.3 million bpd in October, data from the General Administration of Customs showed on Wednesday. That is their lowest level since October 2016.

“Lower imports reflected less purchases from independent refineries as many of them are running out of crude quotas for this year,” said Li Yan, oil analyst at the Zibo Longzhong Information Group.

For next year, however, independent refiners are likely to boost their imports again as authorities on Wednesday raised their 2018 crude oil import quota by 55 percent over 2017 to 2.85 million bpd.

Overall, oil markets remain well supported, largely due to an ongoing effort lead by the OPEC and Russia to withhold supplies in order to prop up prices.

With crude more than 40 percent up since June, oil-consuming industries are feeling the pinch.

Beyond fundamentals, traders were closely eyeing escalating tensions in the Middle East.