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Post: Futures Movers: Oil ends down for the day, up for the month; natural-gas futures cut their October loss

Oil futures fell Monday, feeling pressure after a weak reading on China factory activity and a widening of COVID-19 curbs by the country, but still marked their first monthly gain since May.

Previously beaten-down natural-gas futures, meanwhile, rallied by nearly 12% to significantly pare their loss for the month.

Price action
  • West Texas Intermediate crude for December delivery



    fell $1.37, or 1.6%, to settle at $86.53 a barrel on the New York Mercantile Exchange. The front-month contract ended October with a gain of 8.9%, following four straight monthly declines, according to Dow Jones Market Data.

  • December Brent crude
    the global benchmark, was down 94 cents, or 1%, at $94.83 a barrel on ICE Futures Europe. On its expiration day, the contract tallied a 7.8% monthly rise. January Brent

    the most actively traded contract, declined 96 cents, or 1%, to $92.81 a barrel.

  • Back on Nymex, December natural gas

    surged 11.8% to $6.355 per million British thermal units, cutting its October loss to 6.1%.

  • November gasoline

    fell 3.3% to $2.8107 a gallon, with prices up 13.7% for the month, while November heating oil

    lost 7.9% at $4.1909 a gallon, losing 24.4% for the month. Both November contracts expired at the end of the session.

Market drivers

Oil declined Monday after China’s official gauges for measuring factory, construction and service activities all fell into contraction territory in October, underlining fears about economic weakness — and crude demand — by the world’s second-largest economy.

The oil benchmarks “eased their way down at the start of this week, as concerns mount over China’s road to economic recovery following a series of COVID-induced lockdowns this year,” said Harry Altham, energy analyst, EMEA & Asia for StoneX Group, in market commentary.

China’s official manufacturing purchasing managers index fell to 49.2 in October, compared with 50.1 in September, the National Bureau of Statistics said Monday. Economists polled by The Wall Street Journal had, on average, looked for a reading of 49.7. A reading of less than 50 indicates a contraction in activity.

“Renewed restrictions on movement, such as the one seen in the city of Zhengzhou, plus the impact of the Communist Party Congress in Beijing, is thought to have dampened the numbers beyond initial expectations,” said Altham.

China’s official nonmanufacturing PMI, which covers service and construction activity, fell to 48.7 in October from 50.6 in September, weighed down by the slumping service sector and slower growth in construction activity, according to the statistics bureau.

Meanwhile, news reports said Chinese cities were expanding COVID-19 lockdowns in an effort to control the spread of the virus. Lockdowns have been blamed for curtailing crude imports by China and weighing on economic activity.

For October, oil prices posted an overall gain, supported by tight global supplies and a decision by the Organization of the Petroleum Exporting Countries and their allies at a meeting earlier in the month to cut production in November.

In related news, the Organization of the Petroleum Exporting Countries released its 2022 World Oil Outlook report. The long-term view on the oil market said the world economy is expected to more than double in size, and the global population rise by 1.6 billion between now and the year 2045.

The report said oil is expected to retain the largest share in the energy mix, accounting for almost a 29% share in 2045 and that oil demand is projected to increase to around 110 million barrels a day in 2045, from almost 97 million barrels a day in 2021.

Natural-gas rally

Natural-gas futures remained volatile, building on last week’s 3.9% rebound.

The Monday bounce is a continuation of recent developments around renewed liquefied natural-gas flows, with U.S. prices starting to recover after more than halving over the past two months, said Ole Hansen, head of commodity strategy at Saxo Bank.

A stronger-than-expected build in U.S. inventories has started to slow as flows to LNG exporting plants, which had been curtailed in part due to a fire at a major Texas facility, have picked up the pace, tightening domestic supplies, he said.

Commodities Corner: Why natural-gas prices posted a 6-session decline of 26%

Also see: Why have gasoline prices in the Northeast jumped in the past week?

Barbara Kollmeyer contributed to this article.

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