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Oil prices climb as China plans to raise U.S. crude imports, Bonny Light sheds $0.58

Oil prices rise as OPEC, allies agree deal to cut output by 10m barrels/day

Oil prices jumped on Monday after reports that China plans to ship big volumes of United States crude in August and September, which suppressed worries over sluggishness in demand recovery in the aftermath of the coronavirus pandemic and a surge in supplies.

Brent crude was up by 18 cents or 0.40% at $44.98 per barrel at 09:24 West Africa Time just as U.S. West Texas Intermediate crude advanced by 22 cents or 0.52% to $42.23 a barrel.

At the previous session on Friday, Bonny Light, Nigeria’s Banner oil grade, slipped 58 cents or 1.30% to $44.05. Qua Iboe, another key national crude grade, depreciated by 22 cents or 0.48% to close at $45.17.

Chinese state-owned oil companies have temporarily arranged for tankers to convey a minimum of 20 million barrels of U.S. crude for August and September, Reuters said on Friday, as China enlarged energy and farm buys ahead of a review of the Sino-US trade deal.

Unprecedented crude imports from the top oil importer in the world and the relaxation of coronavirus curbs globally have helped oil prices even though new surges of the virus outbreaks in many countries are expected to cool consumption again.

‘Oil demand data was largely positive last week, with U.S. implied gasoline demand rising to just 3.5% away from pre-coronavirus levels and China’s processed crude oil figure in July at a record high,’ said Howie Lee, an economist at Singapore’s OCBC bank.

ANZ projected that demand has grown by 8 million barrels per day (bpd) in the last four months to 88 million bpd – still 13 million bpd smaller below the figure recorded at this time last year.

Read also: Oil prices rise after steep fall in U.S. crude stocks

Investors are seeking more clues on future supply from a meeting this week of a team representing ministers of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, popularly called OPEC+.

The talks have been pushed back to 19th August, a day later than earlier arranged.

The panel, named the Joint Ministerial Monitoring Committee (JMMC), tracks OPEC+ output curbs agreed earlier this year.

In July, the JMMC advised that cuts be reduced from 1st August to around 7.7 million bpd from a slash of 9.7 million bpd since May in compliance with an earlier OPEC+ agreement.

“The attention would likely be once again on quota compliance,” OCBC’s Lee said.

In the U.S., the number of oil and natural gas rigs running last week remained anchored at a record low for a 15th week even as higher oil prices impel some producers to begin drilling again.

Ronald Adamolekun

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Ronald Adamolekun

Ronald Adamolekun is a creative writer with a mixed bag of experience in fields as diverse as data journalism, financial reporting and editing.

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