WTI retreats from 2-year high as China imports decline, Senate vote in focus

West Texas Intermediate crude fell on Monday after hitting a two-year high on Friday as Chinas General Administration of Customs reported that the countrys crude imports fell by 18% in August from July. Losses however remained in check amid ongoing tension in the Middle East with investors awaiting the upcoming vote in the U.S. senate in favor or against Barack Obamas plan to intervene in the Syrian civil war.

On the New York Mercantile Exchange, WTI crude for October delivery fell by 0.47% to $110.01 per barrel at 7:17 GMT. Prices held in range between days high and low of $110.38 and $109.78 per barrel respectively. The contract rose by 2% to a two-year high of $110.53 per barrel on Friday and settled the week 2.4% higher after surging 1.2% in the preceding one.

Meanwhile on the ICE, Brent oil for October settlement fell by 0.34% to $115.72 per barrel at 7:17 GMT. The European benchmark shifted between days high and low of $116.17 and $115.56 per barrel respectively. The contract rose 0.4% on Friday and settled the week 1.6% higher, capping a fourth straight week of gains.

WTI retreated from Fridays two-year high as China trade data showed that the worlds second top consumer imported less oil in August than in July. According to data by Chinas General Administration of Customs, the Asian countrys overseas purchases totaled 21.43 million tons of crude in August, which was 17.9% lower than Julys 26.11 million tons in the preceding month. The countrys imports exceeded exports by the equivalent of 5.02 million barrels per day from 6.13 million in July.

However, demand prospects in China remain bright as the country is steadily stabilizing its economic activity. The Asian nations total exports rose by 7.2% last month, exceeding analysts expectations for a 5.5% surge. Imports increased by 7%, below projections, but still above Julys 5.1% rise.

Meanwhile, consumer inflation rose by 2.6% and remained below the governments target, leaving extra room for mini financial stimulus, which could provide ground for sustainable growth. Chinas producer-price index fell by 1.6% in August after dropping 2.3% in July, marking the smallest decline in six months.

Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong, said for Bloomberg: “The PPI data today, along with yesterday’s trade numbers, showed fairly big improvement in both external and internal demand. They are in line with the economic recovery trend that we have been seeing since July.” Upbeat manufacturing and service sector data also supported the prospects for stabilizing economic activity and improving oil demand in the near future.

Syrian strike

Daily losses remained limited as persisting unrest in Syria continued to bolster concern over global supply disruptions as investors feared that the conflict might spread over to the entire Middle East region, which accounted for 35% of global output in the first quarter. The U.S. Senate is expected to vote on a resolution for a military strike against Syria by the end of the week with Obama having won the support of key lawmakers last week, including ones from the opposition. However, several prominent Congressmen said on Sunday that they had not been persuaded yet to approve a military intervention in Syria, leaving market players ambivalent about their expectations.

Meanwhile, President Bashar al-Assad continued to deny allegations that he used chemical weapons against civilians. Russian President Vladimir Putin said at the latest G20 meeting that he will keep supporting Assads regime and the U.S. will face opposition. Saudi Arabia backs a U.S.-led military strike against Syria, will Iran supports Russias stance.

Ric Spooner, a chief market analyst at CMC Markets in Sydney, said for Bloomberg: “There’s a lot going on at the moment and traders are just prepared to keep valuations or prices around current levels as they await further developments, particularly in Syria.”