NEW YORK: Oil edged up in choppy trade on Monday, as weakening U.S. business activity data eased expectations for more aggressive interest rate hikes, while data showing demand from China remained lacklustre in September limited prices.

Brent crude futures for December settlement were up 55 cents, or 0.6%, at $94.05 a barrel by 10:39 a.m. EDT (1439 GMT), after rising 2% last week. U.S. West Texas Intermediate crude for December delivery gained 55 cents, or 0.7%, to $85.60 a barrel. Both benchmarks had fallen by $1 a barrel earlier in the session.

Although higher than in August, China’s September crude imports of 9.79 million barrels per day were 2% below a year earlier, customs data showed on Monday, as independent refiners curbed throughput amid thin margins and lacklustre demand.

“The recent recovery in oil imports faltered in September,” ANZ analysts said in a note, adding that independent refiners failed to utilise increased quotas as ongoing COVID-related lockdowns weighed on demand.

Uncertainty over China’s zero-COVID policy and property crisis are undermining the effectiveness of pro-growth measures, ING analysts said in a note, even though third-quarter gross domestic product growth beat expectations.

Oil prices regained some ground after data that showed U.S. business activity contracted for a fourth straight month in October, with manufacturers and services firms in a monthly survey of purchasing managers both reporting weaker client demand.

Oil prices mixed as China demand hopes contends with recession concerns

Positive signal

S&P Global said on Monday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 47.3 this month from a final reading of 49.5 in September.

That weakening could indicate that the U.S. Federal Reserve’s interest rate increases to fight inflation have been working and may persuade it to slow its rate hike policies, a positive signal for fuel demand, said Phil Flynn, an analyst at Price Futures group.

“The miss on the PMI number is a sign that the economy may be slowing a bit, which turns out to be bullish,” Flynn said.

Brent rose last week despite U.S. President Joe Biden announcing the sale of a remaining 15 million barrels of oil from the U.S. Strategic Petroleum Reserves, part of a record 180 million-barrel release that began in May.

Biden added that his aim would be to replenish stocks when U.S. crude is around $70 a barrel.

But Goldman Sachs said the stocks release was unlikely to have a large impact on prices.

“Such a release is likely to have only a modest influence (<$5/bbl) on oil prices”, the bank said in a note.

U.S. energy firms added oil and natural gas rigs last week for the second week in a row as relatively high oil prices encourage firms to drill more, energy services firm Baker Hughes Co said in a report.