Oil battered by negative China mood

Considering China

Oil prices are holding up better than you might think considering the negative mood out of China this morning. Psychological support for oil near the $90.00 a barrel area and the gap at $89.96 has bearish traders a bit concerned about piling on at this point. Still Chinese property stocks got hammered, hitting the daily limit down in some cases as the Chinese government decided to put the hammer down on their real estate sector. The Wall Street Journal said, "State Council said authorities will strictly enforce a personal income tax of 20% on profits from home sales. Previously, home sellers had a choice to pay a 20% tax on the profit from property they sold or a 1% to 3% tax on the selling price, which is more widely opted for. The statement didn't offer a date for the move."

“The new rules would mean that a seller would have to pay a 20 million yuan ($3.2 million) tax on a home bought for 100 million yuan and sold for 200 million yuan, a sharp increase from the previous 2 million to 6 million yuan the seller might pay under current rules. China's policy makers were responding to evidence that — after three years of attempts to control prices — the property market is heating up again. Beijing's top leaders fear that fast-rising home prices and the lack of affordable options could threaten economic and social stability.”

Oil prices also got pressure from some progress allegedly with Iran. Market talk of Iranian tankers being filled with oil did not exactly improve the market mood. Bloomberg reported that at least seven Iranian oil tankers able to hold 14 million barrels of crude are anchored in the Persian Gulf, ship-tracking data compiled by Bloomberg show. The Oceanic, Companion, Freedom, Valor, Millionaire, Maharlika and Tamar haven't left the region since the start of last month, according to data compiled by IHS Inc., an Englewood, Colorado-based research company. Signals were captured from each of the ships today. All except the Millionaire were at least 80% of their maximum depth in the water, data show.

We should see a big drop in crude supply this week as the Gulf Coast saw imports slowed by fog in the shipping channels. Crude supply could fall by 4.o million barrels. Gasoline should fall by 1.0 million barrels as refiners start to drawdown the winter blend supply. Distillates should fall by 1.0 million and refinery runs should increase slightly by 0.5%.

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