China's declining refinery run rates and weak economic data have contributed to a bearish sentiment in the oil market, offsetting the positive impact of expected Fed rate cuts.
Chinese refinery run rate s fell by 10% on the month in August, contributing to persistent bearishness on oil market s even as supply disruptions in the U.S. and Libya helped the benchmarks start the week with gains. ING analysts Warren Patterson and Ewa Manthey wrote in a note earlier today that August processing rates at Chinese refineries averaged 12.6 million barrels daily, which besides being a tenth lower than July rates, was also down by 17.5% on the year.
China has been the central factor driving growing bearishness in oil markets after two decades of such strong grow that many traders apparently assumed it was the default rate of oil demand growth for the Asian powerhouse. Now that they are seeing this is not the case, they have swung the market into a net short position for the first time ever, the ING analysts noted.
Refinery Run Rate Oil Market Bearishness Federal Reserve Interest Rate Cut Demand Economic Data Inventories
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