WTI little changed on fiscal impasse, China trade data

West Texas Intermediate recovered from losses during Asian trading but remained little changed after lawmakers failed to reach an agreement to raise the nations debt limit and reopen the federal government over the weekend. Deteriorating consumer confidence in the U.S. and worse than expected Chinese trade data further weighed on prices.

On the New York Mercantile Exchange, WTI crude for delivery in November rose by 0.08% to $102.10 per barrel at 6:59 GMT. Prices held in range between days high and low of $102.11 and $101.24 a barrel respectively. Light, sweet crude fell by 1% on Friday and settled the week 1.8% lower.

Meanwhile on the ICE, Brent futures for November settlement rose by 0.09% to $110.52 a barrel at 6:59 GMT. The contract shifted in a days range between $110.57 and $109.92 per barrel. The European benchmark fell by 0.7% on Friday but settled the week 1.5% higher.

Market sentiment remained dampened after U.S. lawmakers failed to break through the fiscal impasse over the weekend, adding to concern for a last-minute resolution. Senate Republicans blocked Democrats’ plan to suspend the debt ceiling through 2014 on Saturday, while discussions between House Republicans and President Obama also hit a dead end. Senate Democrats rejected a proposal by Republican Senator Susan Collins and Democrat Joe Manchin of West Virginia that would push the next debt ceiling decision to the end of January and provide government funding for the next six months to March.

Senators Harry Reid and Mitch McConnell sat down face to face on Saturday for the first time since July after talks between House Republicans and the White House failed. They both described their discussions as “constructive” but “very preliminary”.

Talks to avoid a U.S. sovereign debt default showed some signs of progress on Sunday but there were still no guarantees for an end to the fiscal deadlock. Despite the Columbus Day federal holiday, both the Senate and House of Representatives are scheduled to be in session on Monday.

Chee Tat Tan, an investment analyst at Phillip Futures in Singapore, said for CNBC: “Default is unlikely to happen, in our view. But if theres no deal over the next few days, it will definitely cause some downward pressure on oil as market confidence weakens. We think a steep decline is unlikely, because oil will still be supported by winter demand for heating oil in the United States and a weak dollar.”

The dollar index, which measures the greenbacks strength against a basket of six major counterparts, fell by 0.15% to 80.37 at 6:59 GMT. The December contract held in а narrow range between days high and low of 80.45 and 80.35 respectively. The U.S. currency gauge snapped three days of gains on Friday and fell by 0.1% but settled the week 0.3% higher after losing 0.36% in the preceding two five-day periods. Weakening of the greenback makes dollar-denominated raw materials cheaper for foreign currency holders and boosts their appeal as an alternative investment.

Meanwhile, U.S. consumer sentiment fell to the lowest in nine months in October as the government shutdown and debt default possibility undermined Americans confidence, a private survey showed on Friday. The Thomson Reuters/University of Michigan preliminary consumer sentiment index fell to 75.2 this month from 77.5 in September, underperforming analysts projections for a decline to 76.0.

China trade data

Also fanning negative sentiment, Chinese exports slumped in September, putting a disappointing end to overall positive recent statistics. The General Administration of Customs reported that the Asian country’s outbound shipments fell by 0.3% in September, sharply confounding analysts’ expectations for a 6.0% increase. This was the worst performance in three months. Imports rose by 7.4%, exceeding forecasts for a 7.0% incraese, which narrowed down China’s trade balance surplus to $15.2 billion from $28.61 billion in August. Economists expected the nation’s trade balance to equal $27.7 billion.

The report raised concern over the country’s economic growth prospects and added to Premier Li Keqiang’s challenges to maintain an expansion above 7.5%, something which he earlier pledged to defend. Adding to the concern, the International Monetary Fund trimmed its global growth forecast for this year to 2.9% earlier in the week, down from previously estimated at 3.1% in July. Next year’s projection was cut to 3.6% from July’s prediction for 3.8%.

However, the market drew some support as Chinese crude oil imports rose in September to a record high. The Asian country imported an average of 6.25 million barrels of oil per day, up 28% from a year earlier and beating Julys previous record of 6.15 million bpd.

Market players are awaiting the release of key Chinese economic data on October 17. China’s National Bureau of Statistics will likely report that the country’s economy grew by 1.9% in the third quarter, up from 1.7% in the previous three months. The median forecast of 21 analysts surveyed by Reuters showed that year-on-year China’s economy has expanded by 7.8% in the third quarter, up from 7.5% in the previous period.

The national agency is also due to release the country’s retail sales which likely inched up to 13.5% in September from 13.4% in the preceding month. Industrial production is projected to have expanded by 10.1%, slightly below August’s 10.4% advance.

OPEC output

The International Energy Agency said on Friday that non-OPEC producers will increase their output in 2014 by 1.7 million barrels per day to 56.4 million, led by the U.S., Canada and Kazakhstan. The Paris-based adviser boosted its forecast by 300 000 from its previous estimate in September. Increased output form producers outside OPEC will offset supply shortages from some of the group’s members, which are expected to pump an average 29 million barrels per day in 2014, 100 000 less than EIA’s previous forecast and 1 million below the group’s current pace. Kazakhstan had the biggest contribution for the upward revision after the start of the Kashagan field added 140 000 barrels per day.

Libyas Prime Minister Ali Zeidan said on Sunday that his countrys output has recovered to between 600 000 and 700 000 barrels per day and the government continues to work on resolving the protests, which shut most of Libyas oilfields and exports terminals and crippled production to a tenth of its capacity in the beginning of September.