Brent snaps six-day rally as China imports fall

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% in September from last year's
record high and were below 5 million bpd 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%.
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%,
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 Sept. 6.
The spread has widened this week, in part due to the
decision on Tuesday by the Dow Jones-UBS Commodity Index 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 (1915 GMT)
was around 544,000 contracts, down 6.5% from the 30-day
average. U.S. crude traded around 658,100 contracts, down 0.5% from the 30-day average.
EURO ZONE, CHINA
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.