Oil Markets Start Week on Softer Note

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Crude-oil futures edged lower in Asian hours Monday in a shaky start to this week’s trading as investors kept a close watch on oil-supply data and key macroeconomic indicators for cues.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $45.29 a barrel at 0351 GMT, down $0.41 in the Globex electronic session. November Brent crude on London’s ICE Futures exchange fell $0.44 to $48.16 a barrel.

Oil prices had ended higher last week–Nymex crude rose for the second consecutive week, up by 1.5%, and Brent crude rose by 2.4% last week, snapping a three-week losing streak.

Price movement is tepid as markets in Hong Kong, South Korea and Taiwan are closed today. Other Asia-Pacific markets wavered, with the Nikkei 225 Stock Average last down 1%, Australia’s S&P ASX 200 up 0.9% and the Shanghai Composite down 0.2%.

For the week ahead, oil prices are likely to continue moving sideways, with WTI and Brent crude expected to remain supported at $44.28 and $47.63 a barrel, respectively, analyst Daniel Ang at Phillip Futures said.

He said the key macroeconomic data to watch this week is the U.S. jobs report. If nonfarm payrolls data turn out better than expected, it should send WTI and Brent to trade at the lower end of the price range, Mr. Ang said.

Oil is also pressured by underlying strength in the U.S. dollar since last week after Federal Reserve Chairwoman Janet Yellen argued the case for raising short-term interest rates later this year.

On the supply side, U.S. oil data is being watched closely for signs of any pullback in response to low oil prices. Friday’s U.S. rig count data from Baker Hughes showed the number of oil rigs fell for a fourth straight week.

Markets should watch out for U.S. oil production figures from the Energy Information Administration to be released on Wednesday.

There will be “laser focus” on U.S. oil-production data, and any signs that output has shrunk, even retrospectively for previous months under the EIA’s new methodology, could provide a boost to both WTI and Brent crude prices, Adam Longson, head of energy research at Morgan Stanley, said.

He said China’s actual oil demand numbers for August also run counter to some of the recent concerns in the market, as demand has remained robust especially for fuels like gasoline and even rebounded for fuels like diesel.

“In fact, the figures even suggest there has been some recovery after a slowdown this summer,” he said in a report.

Nymex reformulated gasoline blendstock for October–the benchmark gasoline contract–fell 84 points to $1.3875 a gallon, while October diesel traded at $1.5118, 107 points lower.

ICE gasoil for October changed hands at $465.00 a metric ton, down $2.00 from Friday’s settlement.

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