(Bloomberg) -- Oil nudged lower in Asia, holding close to $40 a barrel, as dimming prospects for another round of U.S. fiscal stimulus before November’s election eroded upward momentum.
Futures in New York eased 0.3%, after rebounding 2% on Tuesday. U.S. stocks settled lower after House Speaker Nancy Pelosi rejected a proposal from Senate Republican leader Mitch McConnell for a smaller-scale approach to new stimulus and demanded a revamped offer from the White House. A stronger U.S. dollar also diminished the appeal of commodities priced in the currency.
Earlier, crude had recovered from Monday’s losses after data showed Chinese imports climbed 2.1% month-on-month in September, signaling improving demand in Asia’s biggest economy.
Crude futures in New York have traded in a narrow range this month. Countries across Europe widened curbs to try to regain a grip on the coronavirus pandemic, while the International Monetary Fund warned that the world economy still faces an uneven recovery until the virus is tamed. Oil demand will take years to recover and will peak at a lower level, the International Energy Agency said Tuesday. After an unprecedented 8% drop this year, global oil consumption will return to pre-crisis levels in 2023, the agency said.
The Organization of Petroleum Exporting Countries downgraded supply forecasts as its rival producers in the U.S. weather the impact of low prices. The producer group and its allies are due to hold a monitoring meeting on Monday to consider whether unprecedented output cuts they’ve made this year are managing to keep the global market in balance.
OPEC+ producers are still planning to ease outpt cuts by 2 million barrels a day in January, United Arab Emirates Energy Minister Suhail Al Mazrouei said at the Energy Intelligence Forum.
Meanwhile, refining margins continue to deteriorate, boding poorly for oil prices as it becomes less profitable for refineries to process crude. The combined refining margin for gasoline and diesel fell toward $9 a barrel on Tuesday, and is at its lowest for this time of year since 2009. In Europe, fuel production at Galp Energia’s refinery has been suspended since Oct. 10, as market conditions forced the company to carry out a planned operational adjustment of its refining system.
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