Oil prices climbed on Monday, recouping some losses from the previous session as new data showed a rebound in the world’s second and third largest economies, China and Japan.
Figures showed Chinese refineries processed the most crude ever in October on a daily basis, while new lockdowns in the United States and Europe weighed on demand.
Brent crude futures for January were up 78 cents, or 1.8%, to $43.56 a barrel by 0950 GMT, while U.S. West Texas Intermediate crude for December was at $40.96, up 83 cents or 2.1%.
“Fundamentally China’s numbers do support why oil prices can keep at these levels,” said OCBC economist Howie Lee.
Both contracts gained more than 8% last week on hopes of a vaccine for COVID-19 and that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, would maintain lower output next year to support prices.
The group, known as OPEC+, has been cutting production by about 7.7 million barrels a day (bpd), with a compliance rate seen at 101% in October, and had planned to increase output by 2 million bpd from January.
OPEC+ is set to hold a ministerial committee meeting on Tuesday that could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.
“There is no denying that the oil market is fully in the hands of OPEC+,” SEB chief commodity analyst Bjarne Schieldrop said. “The organisation is the only reason why oil prices today are not $20 a barrel. As such, their upcoming meeting on Nov 30/Dec 1 is no less hugely important.”
However, Libya’s speedy recovery in production to more than 1.2 million bpd presents a challenge to OPEC+ cuts, while a slowdown in traffic across Europe and the United States has dampened fuel demand recovery hopes this winter.
Additional reporting by Florence Tan and Roslan Khasawneh; Editing by Clarence Fernandez and Jason Neely