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MW: Oil under pressure after weak Chinese trade data
 
Crude-oil futures were under pressure in Asian trade Monday after weak Chinese trade data, and more economic and oil production numbers are expected to set the tone for oil prices this week.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May CLK5, +2.07% traded at $51.73 a barrel, up $0.07 n the Globex electronic session. May Brent crude LCOK5, +2.23% on London’s ICE Futures exchange was unchanged at $57.87 a barrel.

Oil prices had gained last week after a further drop in the U.S. drilling-rig count. Nymex crude gained 5.1% last week and has been up for four consecutive weeks, while Brent crude gained 5.3% and has been up for three of the past four weeks.

Earlier Monday, customs data showed Chinese exports slid 15% from a year earlier in March while imports dropped 12.7%. Signs of sluggish demand at home and abroad in the world’s second-largest economy are bearish for oil.

Later this week, China’s GDP numbers, and the monthly oil market reports from the International Energy Agency and the Organization of the Petroleum Exporting countries will drive oil market sentiment.
Despite a price rally, global oil fundamentals are now starting to deteriorate following strong demand in the first few months of the year, Adam Longson, head of energy research at Morgan Stanley, said in a note to clients.

Global oil refining margins, while still healthy, have fallen materially, global refinery maintenance is rising and oil product demand is weakening seasonally, he said.

Additionally, higher exports from Iraq, Libya, Saudi Arabia and Russia are adding to oil supply and reports of slower sales of West African cargoes are also emerging.

Froth in ETF inflows: Oil markets also risk higher volatility on account of the large volumes of financial inflows registered in the last few months.

“Crude-linked ETF, or exchange-traded fund inflows have created significant froth in oil market trading and supported, in particular, WTI flat price this year,” Citi Research said.

It said estimated net-long holdings for the largest unlevered and levered U.S.-listed crude ETFs quadrupled in the first quarter, pushing the combined open interest on Brent and WTI to all-time highs and helping exaggerate price moves and creating price distortions.

“Unwinding this length could exacerbate a downside oil price correction in the second quarter given the bearish physical fundamentals,” the bank said in its quarterly report.

Nymex reformulated gasoline blendstock for May RBK5, +1.55% — the benchmark gasoline contract — fell 2 points to $1.8071 a gallon, while May diesel traded at $1.7716, 55 points higher.

ICE gasoil for May changed hands at $540.25 a metric ton, up $1.50 from Friday’s settlement.

Source