Oil climbs on China, Japan rebound, hopes of a reduction in OPEC + supply By Reuters

By Florence Tan

SINGAPORE (Reuters) – Oil prices climbed on Monday, recouping some losses from the previous session as hopes that OPEC + will maintain current production brakes offset concerns about weaker fuel demand due to the growth of coronavirus infections and increased production in Libya.

Figures showing a rebound in the world’s second and third largest economies, China and Japan, also supported prices, along with data that Chinese refineries processed the most crude ever processed in October on a daily.

Brent futures for January () rose 54 cents, or 1.3%, to $ 43.32 a barrel at 7:23 a.m. GMT, while U.S. West Texas Intermediate crude for December () was at $ 40.76 per barrel, up 63 cents, or 1.6%.

“Basically, China’s numbers explain why oil prices can hold up at these levels,” OCBC economist Howie Lee said.

Both contracts won more than 8% last week on hopes of a COVID-19 vaccine and that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, will maintain higher production. weak next year to support prices.

The group, also known as OPEC +, reduced production by around 7.7 million barrels per day, with a compliance rate of 101% in October, and had planned to increase production by 2 million bpd from January.

OPEC + is expected to hold a ministerial committee meeting on Tuesday that could recommend changes to production quotas when all ministers meet on November 30 and December 1.

However, the rapid resumption of oil production in OPEC member Libya, back to over 1.2m bpd presents a challenge for OPEC + cuts, while a slowdown in Traffic across Europe and the United States has dampened hopes of a recovery in fuel demand this winter.

“European motorway traffic has fallen by nearly 50% in recent weeks in some countries (like France) as lockdown measures are tightened,” ANZ analysts said.

The movement of people on freeways in the United States was also slowing, based on vehicle mileage data, despite authorities’ reluctance to adopt new curbs, they added.

As fuel demand slows, data from Baker Hughes showed that the number of oil and drilling rigs in the United States rose last week to its highest level since May as producers, boosted by rising crude prices, come back to the well.

ANZ analysts expect excess oil to rise to between 1.5 and 3 million bpd in the first half of next year, with a vaccine only increasing demand in the second half of the year.