Oil recedes but hopes of economic recovery in China weaken

HOUSTON (Reuters) – Oil prices fell on Monday, but losses were eased, as did the US stock market, investors betting that China's economic stimulus package on Sunday would be enough to boost the world's second-largest economy and the demand for crude.

Brent, a global benchmark, slipped below $ 83 a barrel at the start of the session, in part because fears that the US-China trade war could weaken crude demand in China.

Prices, however, rebounded at the low end of the session, investors betting that the Chinese central bank's decision on Sunday to reduce lender reserve requirements would boost economic growth, analysts said.

"Whenever China lowers its interest rates, it increases its oil consumption," said Phil Flynn, an analyst at Price Futures Group in Chicago. "The coldest dominate."

Brent crude LCoC1 reached a session low of $ 82.66 and then rebounded to 48 cents at $ 83.68 per barrel at 11:26 am (15:26 GMT). Brent hit a record $ 86.74 last week, its highest level in four years.

US crude CLc1 fell 32 cents to 74.02 dollars a barrel, while its lowest level was 73.07 dollars.

Oil traders initially reacted to the liquidation of Chinese equities, but with the opening of the US market, "we collapsed," said Mark Anderle, energy trader at TAC Energy.

According to reports, some Iranian oil exports would continue to flow after the United States reprinted the sanctions. Two Indian companies ordered Iranian barrels in November, the Indian Minister of Petroleum said on Monday.

The Trump administration is considering canceling the sanctions, a US government official said on Friday. Washington had lobbied governments and businesses around the world to bring Iran's oil imports back to zero under US sanctions on Nov. 4.

Last week, Saudi Arabia announced its intention to raise crude oil production to 10.7 million barrels a day, the highest level ever achieved by the Kingdom.

Iran's oil minister, Bijan Zanganeh, said on Monday that Saudi Crown Prince Mohammed bin Salman said the kingdom could replace Iran's crude exports, which is "nonsense".

"Iran's oil can not be replaced by Saudi Arabia or any other country," Zanganeh said, according to his ministry's website.

US market participants also reacted to a bullish report from the market information company Genscape that crude inventories have recently fallen at the US Cushing, Oklahoma stockpile, analysts said. .

"People think this is an opportunity to take more visibility," said Michael Corcelli, chief investment officer at Alexander Alternative Capital LLC in Miami.