Oil prices lifted higher on Monday, recovering some of the grounds lost at the Friday session, with the optimism that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies Russia-led by Russia, a grouping known as OPEC+, will maintain supply curbs overshadowed worries over lower fuel demand owing to increasing coronavirus infections and bigger Libyan production.
Data pointing to a recovery in the second and third economies in the world – China and Japan – equally strengthened prices just as figures that refineries in China processed the hugest crude ever in October on a daily basis did.
Brent crude futures for January edged up 54 cents, or 1.3%, to $43.32 per barrel by 08: 23 West Africa Time, while U.S. West Texas Intermediate (WTI) crude futures for December jumped to $40.76, up by 63 cents or 1.6%.
Nigeria’s flagship crude grade, Bonny Light, depreciated by 81 cents or 1.86% to $42.66 at the last session. On the same trading day, Qua Iboe, another top national oil grade, fell by 90 cents or 2.08% to $42.45.
“Fundamentally China’s numbers do support why oil prices can keep at these levels,” said Howie Lee, economist at OCBC.
Brent and WTI soared by over 8% last week, spurred by the optimism of a vaccine remedy for COVID-19 and expectation of an output cut by OPEC+ to boost prices next year.
OPEC+ has been has been reducing supply by nearly 7.7 million barrels per day (bpd), achieving 101% level of compliance in October and had planned to up production to 2 million bpd beginning from January.
A ministerial committee of the group that may prescribe reviews of production quotas when all the ministers come together on 30th November and 1st December is due on Tuesday.
Nevertheless, the swift rebound of oil production in Libya, a member of OPEC, to over 1.2 million bpd poses a problem to output cuts, while a reduction in traffic in Europe and the U.S. weakened the possibility of fuel demand recovery this winter.
Analysts at ANZ said “European motorway traffic is down almost 50% in recent weeks in some countries (such as France) as lockdown measures are increased.”
Much as fuel demand weakens, statistics from Baker Hughes data revealed the U.S. energy rig count increased to its peak since May amidst producers’ comeback to the wellpad, encouraged by oil prices.
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