Oil prices steady after overnight tumble on dollar strength, China concerns
FILE PHOTO: An employee pumps petrol into a car at a petrol station in Hanoi, Vietnam December 20, 2016.
SINGAPORE (Reuters) - Oil prices steadied on Tuesday after sharp falls the session before to the lowest in about three weeks as a stronger U.S. dollar and a drop in Chinese refining runs hit the market.
Global benchmark Brent crude futures LCOc1 were up 3 cents, or 0.1 percent, at $50.76 at 0551 GMT. That was just above the contract's 100-day moving average, briefly breached in the previous session.
U.S. West Texas Intermediate crude futures CLc1 were down 1 cent at $47.58 a barrel.
Oil prices tumbled more than 2.5 percent on Monday in volatile trade as the dollar strength and the demand concerns in China, the world's second-largest oil user, weighed on sentiment. A stronger dollar tends to limit the demand for oil for buyers paying in other currencies. Both Brent and WTI had reached two-month highs on Aug. 10.
"Stale speculative long positioning and a reluctance to hold unprofitable positions has been the main force behind the oil rally running out of steam over the last few sessions," said Jeffrey Halley, senior market analyst at brokerage OANDA.
Chinese oil refineries operated in July at their lowest daily rates since September 2016, official data showed on Monday, to ease brimming inventories as state-owned oil giants faced off independents in a retail petrol price war.
Analysts said the drop was steeper than expected, exacerbating concerns that a glut of refined fuel products could weaken Chinese demand for oil.
The dollar firmed on Tuesday after North Korea's leader signaled that he would delay plans to fire a missile near Guam, further easing tensions and prompting investors to move back into riskier assets.
The dollar index .DXY, which measures the greenback against a basket of six major currencies, climbed 0.4 percent on Monday and was up 0.1 percent on Tuesday.
An announcement by the Nigerian subsidiary of Royal Dutch Shell (RDSa.L) that it had lifted a force majeure on Bonny Light crude exports also added to market surplus woes.
Oil prices had earlier on Monday been supported by reports that Libya's top oilfield had cut its output by 30 percent on security concerns.
"A mere supply cut is not going to boost prices," said Sukrit Vijayakar, director of energy consultancy Trifecta. "We actually need product demand for that to happen."
U.S. crude stockpiles USOILC=ECI likely fell for the seventh consecutive week, along with a probable fall in distillate and gasoline inventories last week, a preliminary Reuters poll showed.
The weekly U.S. crude inventory report from the industry group American Petroleum Institute (API) is due out later on Tuesday. Official U.S. government statistics will be released on Wednesday.
Efforts by the Organization of the Petroleum Exporting Countries and other oil producers to limit output have helped lift Brent past $50 a barrel, but concerns remain that these efforts could be undermined by producers in the U.S. and other countries.
U.S. shale oil production is expected to grow for its ninth consecutive month in September to 6.15 million barrels per day, the U.S. Energy Information Administration said on Monday.