Oil rally snaps on rising crude shipments, US rig count, China fuel exports

NEW YORK — Oil settled down more than 3% on Monday, retreating from last week’s twomonth highs, on worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising US oil rig count.

China’s July diesel and gasoline exports soared 181.8% and 145.20%, respectively, from the same month last year, putting pressure on refined product margins.

In the United States, BP Plc’s 413,500 barrel per day ( bpd) refinery in Whiting, Indiana, returned to normal production for the first time since late July, adding to refined products supply.

On the crude oil front, US drillers added 10 oil rigs in the week to Aug. 19, the eighth straight week of rig additions, as crude rebounded toward the $50-a-barrel mark that makes drilling viable.

Elsewhere, Iraq plans this week to increase exports of Kirkuk crude by 150,000 bpd from its northern fields while Nigerian rebels who regularly attacked oil facilities in the country earlier this year said they were ready for a cease-fire.

Brent crude settled down $1.72, or 3.4%, at $49.16 a barrel. It hit a two-month high of $51.22 on Friday.

US West Texas Intermediate crude’s front- month contract, September, closed down $ 1.47, or 3%, at $47.05 before expiring. It hit a six-week high of $48.75 on Friday.

Oil rallied with few stops over the past two weeks, going from a bear to bull market as it reversed a loss of more than 20% in early August on speculation Saudi Arabia and the rest of the Organization of the Petroleum Exporting Countries ( OPEC) will agree to a production freeze with Russia and other nonopec members.

“We continue to view a meaningful OPEC production agreement as highly unlikely,” Wall Street investment bank Morgan Stanley said in a note.

“It is unlikely Riyadh will take any freeze negotiation seriously as officials believe the market share policy is slowly but surely working,” Morgan Stanley added, referring to the Saudi policy of defending market share over price support. —