After Country Garden debt deal, focus shifts to China property recovery prospects

By Xie Yu and Carolina Mandl

HONG KONG/NEW YORK, Sept 4 (Reuters) – Country Garden’s 2007.HK deal with creditors for an extension on onshore debt payments worth 3.9 billion yuan ($537 million) has brought the developer and China’s crisis-ridden property sector some much-needed respite.

But while investors in the company and China economy-watchers alike may be heaving sighs of relief, it remains to be seen whether a raft of government stimulus measures will soon help revive demand and ease the sector’s cash squeeze.

The financial woes of China’s top private developer have only further highlighted the fragile state of the country’s real estate industry which accounts for roughly a quarter of the economy and has been in dire debt straits since 2021.

Considered financially sound compared to peers, Country Garden had not missed a debt payment obligation, onshore or offshore, until coupon payments on dollar bonds last month after slowing home demand hurt its cash flow.

Since then, Chinese authorities have rolled out a number of measures, the most significant being the lowering of existing mortgage rates and preferential loans for first-home purchases in big cities.

“We will see in the coming months if these supply-side measures are able to revive homebuying demand, which is crucial for the fate of China’s developers and their ability to handle their upcoming debt maturities,” said Tara Hariharan, managing director at global macro hedge fund NWI Management in New York.

She noted that Country Garden and other developers face payments for sizeable maturities this year.

In the deal reached after a vote on its proposal late on Friday, Country Garden is now allowed to repay the onshore debt in instalments over three years, instead of meeting its obligations by Sept. 2.

It also has another immediate, albeit much smaller, debt payment challenge – the ending of a grace period on Tuesday for last month’s missed coupon payments worth a total of $22.5 million on two offshore dollar bonds.

That Country Garden was able to avert an onshore default has raised hopes it will be able to make the interest payments on those bonds, said three of its offshore creditors, declining to be named as they were not authorised to speak to the media.

After that, the creditors said they expect Country Garden to enter into restructuring negotiations for its entire offshore debt to avoid a “hard default”, similar to what it did with the onshore creditors.

Country Garden did not immediately respond to a request for comment.

While China property industry may have gained some respite, some market participants said they plan to stay away from the sector until there is a rebound in home sales.

“We sold all our Chinese real estate stocks in April 2020 and haven’t bought back any since,” said Qi Wang, CEO of Hong Kong-based MegaTrust Investment. “Wouldn’t touch the private developers with a ten-foot pole right now.”

($1 = 7.2606 Chinese yuan)

(Reporting by Xie Yu in Hong Kong, Carolina Mandl in New York and Joe Cash in Beijing; Writing by Sumeet Chatterjee; Editing by Edwina Gibbs)

((sumeet.chatterjee@thomsonreuters.com; +852 3462 7757;))

Wall Street ends mixed as inflation data buoys optimism

Aug 31 – The S&P 500 ended lower and the Nasdaq higher on Thursday after US inflation data matched estimates, underscoring expectations the Federal Reserve could pause its monetary tightening, while Salesforce climbed following an upbeat forecast.

The Nasdaq reached its highest in over four weeks after a Commerce Department report showed the Personal Consumption Expenditures (PCE) price index, considered the central bank’s preferred inflation gauge, climbed 3.3% in July on an annual basis, in line with expectations.

Excluding volatile food and energy components, the core PCE price index rose 4.2% in July, year-on-year, also in line with estimates.

Traders’ expectations for a pause in rate hikes at the Fed’s September policy meet remained at an 88.5% chance, while their bets on the central bank keeping rates unchanged in November stood at 51%, according to the CME Group’s FedWatch tool.

“Investors believe the Fed is data dependent, and the data is in the market’s favor. All these interest rate hikes are paying off,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Investors are awaiting more comprehensive non-farm payrolls data due on Friday for greater clarity on the Fed’s likely monetary path.

The yield on the 10-year Treasury notes eased to 4.09%, lifting major growth stocks such as Amazon (AMZN), which gained 2.2%.

The most traded stock in the S&P 500 was Tesla (TSLA), with USD 27.7 billion worth of shares exchanged during the session. The electric car maker’s shares rose 0.46%.

Salesforce (CRM) rallied 3% following upbeat revenue forecasts from the cloud-based software provider as it benefits from price hikes and resilient demand.

Weekly jobless claims for the week ended Aug. 26 fell to 228,000, compared with estimates of 235,000 claims, reining in investor sentiment, the Labor Department said in a report.

The data follows smaller-than-expected growth in private payrolls on Wednesday that signaled a softening labor market and drove the S&P 500 to a three-week closing high.

The S&P 500 declined 0.16% to end at 4,507.66 points.

The Nasdaq gained 0.11% to 14,034.97 points, while the Dow Jones Industrial Average declined 0.48% to 34,721.91 points.

All three main indexes posted losses for August, with the S&P 500 and Nasdaq logging their first monthly declines since February.

For the month, the S&P 500 fell 1.8%, the Dow fell 2.4% and the Nasdaq fell 2.2%.

Of the 11 S&P 500 sector indexes, seven declined on Thursday, led lower by healthcare, down 1.21%, followed by a 1.03% loss in utilities.

Among other stocks, Dollar General (DG) slumped 12% after the discount retailer cut its annual same-store sales forecast. Rival Dollar Tree’s (DLTR) shares fell 1.7%.

Dismal manufacturing data from China hit the US-listed shares of Chinese companies JD.com (JD) and Baidu (BIDU), down 2.2% and 1.6%, respectively.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.8-to-one ratio.

The S&P 500 posted 22 new highs and four new lows; the Nasdaq recorded 71 new highs and 101 new lows.

Volume on US exchanges was relatively light, with 10.2 billion shares traded, compared to an average of 10.5 billion shares over the previous 20 sessions.

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru, and by Noel Randewich in Oakland, California; Editing by Vinay Dwivedi and Richard Chang)

Gold clings to one-month highs as cooling US inflation boosts Fed pause bets

Aug 31 – Gold steadied on Thursday, hovering near its one-month peak, after as-expected US inflation and weaker jobs numbers reinforced expectations that the Federal Reserve will keep interest rates on hold this year.

Spot gold edged down 0.1% to USD 1,940.23 per ounce at 1:51 p.m. EDT (1751 GMT), close to its highest since Aug. 2, at USD 1,948.79, hit on Wednesday.

US gold futures settled 0.4% lower at USD 1,965.90.

US inflation as measured by the personal consumption expenditures (PCE) price index rose 0.2% last month, matching June’s gain. In the 12 months through July, the PCE price index increased 3.3%, after advancing 3.0% in June.

US consumer spending, which accounts for more than two-thirds of the country’s economic activity, accelerated in July.

Weekly initial jobless claims fell 4,000 to 228,000. That compares with a four-week average of 237,500.

Bob Haberkorn, senior market strategist at RJO Futures, said that while the numbers were “not terrible”, they were “not great” either and may mean that the US Federal Reserve would be in a position to halt interest rate rises early next year.

Gold is now in a wait-and-watch mode, and a drop in bond yields could prompt some strength in bullion, Haberkorn added.

US Treasury yields and the dollar index ticked up, after briefly trimming their gains following the economic data, making non-yielding bullion less attractive.

Bets on the Fed leaving rates unchanged in September stood at 88.5%, while bets of a pause in November were at 51%, according to the CME Group’s FedWatch tool.

Silver eased 0.7% to USD 24.48 per ounce, having climbed to a more than one-month high on Wednesday. Platinum fell 0.8% to USD 966.05, but was headed for its second consecutive monthly gain.

Impala Platinum IMPJ.J Chief Executive Nico Muller said a rapid decline in palladium and rhodium prices has squeezed profits. “There was no immediate risk of mine closures, but management would weigh each mine’s potential to generate profit.”

Palladium fell 0.4% to USD 1,217.33, and was set for a 5% monthly fall. It is down 31% this year.

(Reporting by Harshit Verma in Bengaluru; Editing by Alexander Smith, Mark Potter, and Nick Macfie)

Chinese exporters using currency swaps to retain dollars as yuan sags

SHANGHAI/SINGAPORE, Aug 31 – Chinese exporters are using a complicated currency swap strategy to avoid converting their dollar earnings into yuan for fear of losing out on potential gains in the US currency, official data and conversations with companies show.

China’s state banks are counterparties to some of these swap transactions that allow exporters to exchange their dollars for yuan, suggesting the country’s currency regulator is comfortable with these trades even as authorities try to curb intense pressure on the yuan in spot markets.

Exporters such as Ding, a Shanghai-based businessman, are holding on tightly to their dollar earnings, reluctant to sell and convert them into yuan, which recently skidded to nine-month lows.

“My fellow exporter friends and I have been discussing if we want to use foreign exchange swap trades to get the yuan,” said Ding, who trades in electronics and toys and prefers to go by his last name.

“The key concern is that the price of the dollar keeps going up.”

The yuan has lost more than 5% against the US dollar so far this year, including a 2% drop this month alone, and is being dragged even lower by foreign capital flowing out of the weakening economy.

The swaps allow exporters to place their dollars with banks and get yuan instead, but through a contract that will eventually reverse the flows and give them back their dollars.

However, while they remove a much-needed source of dollar supplies into spot yuan markets, analysts reckon Chinese monetary authorities can’t really force exporters to convert dollars.

Chinese companies swapped a record USD 31.5 billion for yuan with commercial banks in the onshore forwards market in July alone, and a total of USD 157 billion so far this year, according to the country’s currency regulator.

Ding had initially planned to convert his dollar holdings when the yuan weakened past 7-per-dollar, a level the local currency has crossed only three times since the 2008 Global Financial Crisis.

But he changed his mind as expectations grew that the Federal Reserve would drive the US interest rates higher for longer, and for persistent weakness in the yuan whose yields are falling as China eases monetary policy to support sputtering economic activity.

“The growing monetary policy divergence is the key reason behind the trend,” said Gary Ng, senior economist for Asia Pacific at Natixis.

“As it is unlikely to see any fundamental change in the short run, the gravity of yield differentials will drag the yuan and prompt exporters to bet on the dollar.”

HOW THE SWAP WORKS

Rising US yields and their widening gap with Chinese rates have also flipped rates in the currency forwards market, such that exporters have no incentive to even lock in a forward rate to sell their dollars. One-year yuan is quoted at 7.02 per dollar, versus a spot rate of 7.29.

Traders say the State Administration of Foreign Exchange permits sell-buy dollar-yuan swaps, if companies use their own funds.

When exporters swap higher-yielding dollars for the cheaper yuan for even 3 months, they get local currency for business needs and also earn a pick-up of an annualized 3.5% on the swap deal.

“By trading FX swaps, exporters can postpone their settlements while meeting their yuan demand,” said Becky Liu, head of China macro strategy at Standard Chartered Bank.

A less remunerative but equally effective option is for them to place the dollars as deposits at 2.8%, and use that as collateral for yuan loans, with net gains of around 2%.

China’s lenders have lowered those dollar deposit rates twice this year to discourage hoarding and spur exporters to convert their dollars into yuan, yet more of them seem to have turned instead to swaps.

The partially state-owned China Merchants Bank even nudges exporters to use swaps.

“If companies want to retain their dollar deposits, they can sign up foreign exchange swap products to increase the returns on dollar deposits,” the bank said in trade recommendations.

China’s central bank has meanwhile ramped up efforts to defend the yuan, by continuing its months-long trend of setting firmer-than-expected yuan mid-point benchmarks and even asking some domestic banks to scale back their outward investments.

Exporters’ swaps, meanwhile, give state banks a pile of dollars to use in their yuan operations, in which they can undertake swaps to acquire the dollars from the onshore forwards market and sell them in the spot market to stem fast yuan declines.

(Reporting by Jindong Zhang and Winni Zhou in Shanghai, Tom Westbrook in Singapore;
Editing by Vidya Ranganathan and Kim Coghill)

Oil dips as China factory activity shrinks; market eyes US data

SINGAPORE, Aug 31 – Oil prices eased on Thursday after data showed China’s manufacturing activity shrank for the fifth month in a row, and as investors cautiously awaited a US personal consumption expenditure report later in the day for any clues on the interest rate outlook.

Brent crude futures for October, which expire on Thursday, dipped 9 cents, or 0.1%, at USD 85.77 per barrel by 0630 GMT. The more active November contract was down 10 cents, or 0.1%, at USD 85.14.

US West Texas Intermediate crude futures for October CLc1 eased 6 cents, or 0.1%, at USD 81.57.

China’s manufacturing activity again in August, an official factory survey showed on Thursday, fuelling concerns around weakness in the world’s second-biggest economy.

The official purchasing managers’ index (PMI) rose to 49.7 from 49.3 in July, according to the National Bureau of Statistics, but remained below the 50-point level demarcating contraction from expansion.

A tighter US oil supply outlook supported prices in the previous session, but this was pitted against worries about demand, said Yeap Jun Rong, a market strategist at IG.

“Overall, the conflicting factors force prices onto some indecision today, further brought on by some wait-and-see as focus turns to the US core PCE release later tonight,” Yeap said.

Investors are eyeing inflation numbers as measured by the US personal consumption expenditures, which will be released on Thursday. The PCE is the Federal Reserve’s preferred gauge of inflation.

For now, oil prices are headed for a weekly climb, with US government data showing tighter-than-expected crude supplies, while a military coup in Gabon, an OPEC member, also raised fears of crude oil supply disruptions.

Analysts expect Saudi Arabia to roll over a voluntary oil cut of 1 million barrels per day for a third consecutive month into October, adding to the cuts in place by OPEC+, the Organization of the Petroleum Exporting Countries and allies led by Russia.

Meanwhile, the US government revised down its gross domestic product growth to 2.1% last quarter, from the 2.4% pace reported last month, and data released on Wednesday showed private payroll growth slowed significantly in August.

The Federal Reserve can end its interest rate increase cycle if the labor market and economic growth continue to slow at the current gradual pace, the former president of the Boston Fed said on Wednesday.

“Bad news was good, as weaker US economic data lowered expectations of another rate hike,” ANZ Research said in a note. Higher interest rate reduce demand and pressure oil prices down.

(Reporting by Jeslyn Lerh in Singapore; Additional reporting by Katya Golubkova in Tokyo; Editing by Stephen Coates, Gerry Doyle and Kim Coghill)

US crude futures climb over USD 2/bbl, notches third monthly hike

HOUSTON, Aug 31 – US crude oil prices gained more than USD 2 a barrel on Thursday, rising for a third month in row, on expectations that cuts by the OPEC+ group of oil producing nations, led by Saudi Arabia, would continue through the end of 2023.

Brent crude futures for October expired up USD 1, or 1.2%, at USD 86.86 a barrel. The more active November contract gained USD 1.59, or 1% at USD 86.83.

US West Texas Intermediate crude futures (WTI) for October settled at USD 83.63 a barrel, up USD 2, or 2.5%.

Six-month US crude oil futures traded as low as USD 3.83 below crude for front-month delivery, the steepest discount since Nov. 17, signaling tight supplies and encouraging inventory draws.

“The crude market is reacting to OPEC production cuts being extended,” said Andrew Lipow, president of Lipow Oil Associates. “The cuts could go through the end of the year.”

Brent closed about 1.5% higher for August, while WTI gained 2.2%, with both benchmarks posting gains for the third straight month in a row due to signs of tightening supply.

Analysts expect Saudi Arabia to extend a voluntary oil production cut of 1 million barrels per day into October, adding to cuts put in place by the Organization Petroleum Exporting Countries and its allies, or called OPEC+.

“With Brent prices having stalled in the mid-USD 80s … the prospect of those Saudi barrels returning to the market any time soon looks slim and the impact is increasingly being felt across the world as commercial stock levels of crude and fuel products continue to drop,” said Ole Hansen, a Saxo Bank analyst.

On the supply side, the latest government data showed US crude oil production rose 1.6% in June to 12.844 million bpd, its highest since February 2020, before the COVID-19 pandemic destroyed demand for fuel and other oil products.

Adding to tight supply expectations, however, US crude inventories fell by a larger-than-expected 10.6 million barrels last week, depleted by high exports and refinery runs, government data on Wednesday showed.

US consumer spending increased 0.8% last month, the Commerce Department reported and the S&P 500 rose after US inflation data matched estimates, underscoring expectations the Federal Reserve could pause its monetary tightening.

The US central bank can end its cycle of rate increases if the labor market and economic growth continue to slow at the current gradual pace, Eric Rosengren, the former president of the Boston Fed, said on Wednesday.

Weak Chinese factory data limited further gains, however.

China’s manufacturing activity shrank again in August, an official factory survey showed, fuelling concerns about weakness in the world’s second-biggest economy.

China’s official purchasing managers’ index (PMI) rose to 49.7 from 49.3 in July, the National Bureau of Statistics said, but it remained below the 50-point level. A reading above 50 points represents expansion from the previous month.

The US government on Wednesday revised down its gross domestic product growth for the second quarter to 2.1%, from the 2.4% pace reported last month, and data released separately showed private payroll growth slowed significantly in August.

(Reporting by Erwin Seba; Additional reporting by Arathy Somasekhar in Houston, Ahmad Ghaddar; Jeslyn Lerh in Singapore; Editing by Marguerita Choy and Cynthia Osterman)

Wall Street ends higher as economic data fuels rate-pause bets

Aug 30 – The S&P 500 and Nasdaq closed higher on Wednesday as fresh economic data signaled a cooling US economy, reinforcing expectations the Federal Reserve will pause rate hikes in September.

The S&P 500 index reached its highest in nearly three weeks after an ADP National Employment report showed private payrolls increased by 177,000 jobs in August, compared with estimates of 195,000, suggesting a softening labor market.

The Nasdaq logged its highest close since Aug. 1.

Fresh gross domestic product numbers showed the US economy expanded 2.1% in the second quarter, slower than a preliminary estimate of a 2.4% growth.

“Somewhat softer employment data is easing investor concerns for future Federal Reserve interest rate hikes,” said Rob Haworth, a senior investment strategist at US Bank Wealth Management.

The prospect of a “softer landing” for the US economy also supported demand for growth stocks and other riskier assets at the expense of defensive stocks, Haworth added.

Nvidia (NVDA) rose 1% to close at its highest ever. It was Wall Street’s most traded company, with USD 35.5 billion worth of shares exchanged during the session.

Mastercard (MA) and Visa (V) gained around 0.5% each after a report said the companies were preparing to raise credit card fees.

HP Inc (HPQ) tumbled 6.6% after the personal computer maker trimmed its annual forecast due to slowing demand.

Traders’ bets on the Fed leaving interest rates unchanged in September stood at nearly 89%, up from 86% the day before, while bets of a pause in November rose to 54% from about 52%, the CME Group’s FedWatch tool showed.

US Treasury yields slipped to a near three-week low, with the 10-year yield last at 4.12%.

Volume on US exchanges was light, with 9.0 billion shares traded, compared to an average of 10.6 billion shares over the previous 20 sessions.

The S&P 500 climbed 0.38% to end at 4,514.87 points.

The Nasdaq gained 0.54% at 14,019.31 points, while the Dow Jones Industrial Average rose 0.11% to 34,890.24 points.

Of the 11 S&P 500 sector indexes, nine rose, led by information technology, up 0.83%, followed by a 0.51% gain in energy.

Investors are now looking to the personal consumption expenditures price index, the Fed’s preferred measure of inflation, and non-farm payroll numbers due on Thursday and Friday, respectively, for more clues on interest rates.

Trading activity has been light this week ahead of Monday’s US Labor Day holiday.

Brown-Forman (BFb) fell 4% after the Jack Daniels whiskey maker missed its first-quarter sales and profit estimates.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.9-to-one ratio.

The S&P 500 posted 24 new highs and one new low; the Nasdaq recorded 70 new highs and 76 new lows.

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru and by Noel Randewich in Oakland, Calif; Editing by Savio D’Souza, Vinay Dwivedi, and Richard Chang)

Gold climbs as more weak US data boosts Fed rate-pause bets

Aug 30 – Gold hit its highest in nearly a month on Wednesday, as a fresh batch of weak US economic readings reinforced the view that the Federal Reserve may have to hit pause on its interest rate hikes.

Spot gold rose 0.4% to USD 1,943.92 per ounce by 2:20 p.m. EDT (1820 GMT), after hitting its highest since Aug. 2 earlier in the session. US gold futures settled 0.4% higher to USD 1,973.00.

“Gold is trading at highs for the month as the weaker-than-expected ADP report and GDP revision continue a trend of softer economic indicators that will likely keep the Fed on hold in September,” said Tai Wong, a New York-based independent metals trader.

Benchmark 10-year yields dropped to their lowest since Aug. 11 while the dollar slipped to a two-week low after US GDP data showed a softening of the economy in the second quarter. A drop in US job openings added to the sentiment.

Dollar-priced bullion, which bears no interest, finds support when yields fall.

Bets on the Fed leaving rates unchanged in September rose to nearly 91%, from 88.5% before the data, while bets of a pause in November rose to nearly 59% from 52% a day earlier, according to the CME Group’s FedWatch tool.

Investors now await the PCE price index on Thursday and the nonfarm payrolls (NFP) report on Friday.

“The smart rally in the past week suggests traders were a little short. The market will consolidate ahead of key inflation and payrolls data; a move back above 1980 is needed to awaken bulls’ animal spirits,” added Wong.

“Bad news for the economy will be good news for gold,” said ActivTrades senior analyst Ricardo Evangelista in a note.

Silver fell 0.4% to USD 24.63 per ounce, but was still hovering close to a one-month high.

Platinum was steady at USD 976.05, near its highest level since July 19. Palladium shed 2.1% to USD 1,223.33.

(Reporting by Arpan Daniel Varghese and Harshit Verma in Bengaluru; Editing by Shweta Agarwal and Krishna Chandra Eluri)

Oil rises on US stockpile draw and hurricane jitters

LONDON, Aug 30 – Oil prices extended gains on Wednesday after industry data showed a large draw in crude inventories in the US, the world’s biggest fuel consumer, and as a hurricane in the Gulf of Mexico kept investors on edge.

Brent crude futures for October rose by 42 cents, or 0.49%, to USD 85.91 a barrel by 0748 GMT. The October contract expires on Thursday and the more active November contract LCOc2 was at USD 85.32, up 41 cents.

US West Texas Intermediate crude futures rose 50 cents, or 0.62%, to USD 81.66.

Both benchmarks rallied more than a dollar on Tuesday as the US dollar slid after prospects of further increases to interest rates eased after softer US job data.

US crude stocks fell by a bigger than expected 11.5 million barrels in the week ended Aug. 25, market sources said, citing American Petroleum Institute figures on Tuesday.

The drop suggests firm demand, said Fujitomi Securities analyst Toshitaka Tazawa.

Investors also had an eye on Hurricane Idalia as it moves over the Gulf of Mexico to the east of major U.S. oil and natural gas production sites. The region accounts for about 15% of U.S. oil output and about 5% of natural gas production, according to the Energy Information Administration.

Oil major Chevron Corp evacuated some staff from the region but production was continuing.

Elsewhere, analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.

Based on that expectation, refining sources surveyed by Reuters forecast that Saudi Arabia’s official selling prices for all crude grades sold to Asia in October will be raised to their highest this year.

Meanwhile, the military in Gabon seized power on Wednesday, which could hit the country’s crude supplies and tighten the market further. Gabon exported a monthly average of 160,000 barrels per day to Asia from May to July, Kpler ship-tracking data showed.

Oil’s gains were capped, however, by concerns over fuel demand and the mixed economic situation in China, the world’s biggest oil importer.

(Reporting by Paul Carsten in London, Yuka Obayashi in Tokyo and Trixie Yap in Singapore
Editing by David Goodman)

Oil prices rise after US data shows tighter crude supply

NEW YORK, Aug 30 – Oil prices gained on Wednesday as US government data showed tighter-than-expected crude supplies, while concerns about the Chinese economy limited gains.

Brent crude futures for October rose 37 cents to settle at USD 85.86 a barrel. The October contract expires on Thursday and the more active November contract was up 33 cents at USD 85.21.

US West Texas Intermediate crude futures gained 47 cents to USD 81.63.

On Tuesday, both benchmarks rallied by more than a dollar as the US dollar weakened after soft jobs data reduced the likelihood of further interest rate hikes.

US crude inventories fell by 10.6 million barrels in the last week to 422.9 million barrels, Energy Information Administration data showed on Wednesday. Analysts in a Reuters poll expected a 3.3 million-barrel drop.

Product supplied of finished motor gasoline – a proxy for demand – was at about 9.1 million barrels per day.

“I would expect (gasoline demand) to fall precipitously from here,” said John Kilduff, a partner at Again Capital, as gasoline demand typically peaks in the summer driving season.

Investors kept an eye on Hurricane Idalia, which came ashore as a Category 3 storm on Wednesday morning in a Florida region where the northern panhandle curves into the peninsula. By midday, the hurricane approached southeastern Georgia as a Category 1 storm.

Elsewhere, analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.

Meanwhile, the military seized power in Gabon on Wednesday, which could hit the country’s crude supplies and tighten the market further. Gabon exported a monthly average of 160,000 barrels per day to Asia from May to July, Kpler ship-tracking data showed.

Oil’s gains were capped, however, by concern over the mixed economic situation in China, the world’s biggest oil importer.

Chinese refiners are poised to boost diesel exports in September to more than 1 million metric tons, drawn by lucrative margins from selling overseas and as they expect to receive more export quotas from Beijing, traders and analysts said.

“The market’s interpretation is if they are exporting this much product then things are not going so well with the Chinese economy,” said Andrew Lipow, president at Lipow Oil Associates in Houston.

Despite production cuts from Saudi Arabia, Russia, and others, other exporters like Venezuela and Iran are filling some of the gap, said Ole Hansen, head of commodity strategy at Saxo Bank.

“Ongoing demand concerns may prevent prices from having a sustained move above USD 90,” he said.

(Reporting by Stephanie Kelly in New York; Additional reporting by Paul Carsten in London, Yuka Obayashi in Tokyo, and Trixie Yap in Singapore; Editing by David Goodman, Nick Zieminski, David Evans, Mike Harrison, and David Gregorio)

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