NEW YORK (Reuters) - Brent crude snapped six sessions of gains on Thursday, trading slightly lower after data showed further declines in oil demand from No. 2 consumer China.
Crude oil imports into China, one of the largest engines of demand growth, dropped 12 percent in September from last year’s record high and were below 5 million barrels per day for the fourth consecutive month, customs data showed.
Brent and U.S. crude futures briefly pared losses after U.S. government data showed surprisingly large drawdowns in gasoline and distillate stockpiles. Crude stocks rose more than expected, and traders said overall the report was not enough to overcome the bearish Chinese figures.
In London, ICE Brent crude for November delivery settled at $111.11 a barrel, edging down 25 cents, after hitting a session low of $109.07. Brent came off the day’s lows in early afternoon trading in New York ahead of the November contract’s expiry on Friday.
“There is a squeeze going on ahead of November Brent crude’s expiry,” said Stephen Schork, editor of the Schork Report in Villanova, Pennsylvania.
In the six previous sessions, Brent gained more than $11, or nearly 12 percent.
U.S. November crude futures settled at $84.23, falling $1.34, after sliding to a session low of $83.17. U.S. crude fell for a second day, after stemming five days of gains on Wednesday.
Strength in U.S. heating oil, which closed up 1.3 percent, also helped crude on both sides of the Atlantic pare much of their losses in late trading, analysts said.
Brent’s premium against U.S. crude rose to $26.88 at the close, from $25.79 on Wednesday, It hit a session high of $26.95, the highest in five weeks. Brent’s record premium over U.S. crude, also known as West Texas Intermediate, is $27.23, struck on September 6.
The spread has widened this week, in part due to the decision on Tuesday by the Dow Jones-UBS Commodity Index .DJUBS to add Brent as a component in 2012 and reduce the weighting for U.S. crude.
Brent crude’s trading volume by 3:15 p.m. EDT was around 544,000 contracts, down 6.5 percent from the 30-day average. U.S. crude traded around 658,100 contracts, down 0.5 percent from the 30-day average.
Further pressure on Brent came after the European Central Bank said forcing private bondholders to accept losses on euro zone sovereign debt could damage the reputation of the euro, hurt the bloc’s banks and encourage volatility on foreign exchange markets.
Concerns about shrinking oil demand, in the wake of Europe’s debt problems and slow growth in the United States, again hit the spotlight after the weak Chinese import data.
China’s report followed bleaker demand growth forecasts for this year from the Organization of the Petroleum Exporting Countries and the Paris-based International Energy Agency this week. The U.S. Energy Information Administration separately reported a lower demand forecast for this year, but it raised its estimate for 2012.
Additional reporting by Robert Gibbons in New York and Ikuko Kurahone in London; Editing by Dale Hudson and Andrea Evans