Oil prices climbed on Monday, with Brent crude hitting its five-month high, underpinned by global stimulus measures and a 30% cut in Abu Dhabi’s crude supplies and encouraging Chinese data as demand struggles to return to pre-pandemic levels in a well-supplied market.
Brent crude futures for November climbed 62 cents, or 1.35%, to $46.43 a barrel at 12:37 West Africa Time, while U.S. West Texas Intermediate crude (WTI) was at $43.50 a barrel, up 53 cents, or 0.32%.
At the previous session on Friday, Nigeria’s premium crude grade, Bonny Light gained 14 cents or 0.32% to close at $44.29 per barrel just as another major national oil grade, Qua Iboe jumped by 55 cents or 1.20% to $46.25 a barrel.
Brent is on course to close out August with a fifth consecutive price rise while WTI is set for a fourth monthly gain, having touched a five-month high of $43.78 per barrel on 26th August when Hurricane Laura reared its ugly head.
Abu Dhabi National Oil Company informed customers on Monday it would slash October supplies by 30%, 5% higher than the cut in September, as ordered by the United Arab Emirates government to meet its commitment on the recent OPEC+ AGREEMENT.
“With demand gradually recovering, this will allow the market to better absorb the inventory glut from earlier this year,” OCBC’s economist Howie Lee said.
Energy firms furthered efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries closed down prior to the storm.
A weak U.S. dollar and a survey on Monday surprisingly showing improvement in China’s services sector boosted oil prices even though the demand for fuel has struggled to recover amid the coronavirus pandemic and supplies remain abundant, analysts say, warning hurdles for good going forward.
“Oil is likely to slowly grind higher in modest steps, not explode out of the wellhead higher,” OANDA’s Asia-Pacific analyst Jeffrey Halley said, adding that ample near-term supplies and the fragility of the global recovery limited price gains.
Crude imports by China in September are set to fall for the first time in five months as unprecedented volumes of crude are stored in and outside of the world’s largest oil importer, data from Refinitiv and Vortexa showed.
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