Oil rises nearly 2% as robust China trade data offsets returning supply

In this news, we discuss the Oil rises nearly 2% as robust China trade data offsets returning supply.

NEW YORK (Reuters) – Oil prices rebounded on Tuesday, supported by strong economic data from China that offset the return of supply in other regions, but gains were capped by forecasts of a Slow recovery in global oil demand as coronavirus cases increase.

Brent LCOc1 crude futures ended up 73 cents, or 1.8%, at $ 42.45 a barrel, while US West Texas Intermediate (WTI) CLc1 crude futures traded higher. stabilized at 77 cents, or about 2%, at $ 40.20 a barrel. On Monday, both benchmarks fell nearly 3%.

China, the world’s largest importer of crude oil, absorbed 11.8 million barrels per day (b / d) of oil in September, up 5.5% from August and 17.5% from the year before, but still below the record high of 12.94 million bpd in June, according to customs data.

“Oil prices, which took a heavy blow the day before, were looking for a bright spot and Tuesday offered just that,” said Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy.

“We see that China’s record growth in crude growth is about to end as independent refineries have almost fully used up their state-issued import quotas and companies grapple with inventory. extremely high crude. Therefore, despite the initial enthusiasm, we find that the rise in oil prices today is unwarranted. “

The International Energy Agency (IEA) – which advises Western governments on energy policy – said in its World Energy Outlook that in its central scenario, a vaccine and therapeutics could mean a rebound in the global economy. in 2021 and a recovery in energy demand by 2023.

But under a “delayed recovery scenario,” he said the recovery in energy demand was postponed to 2025.

“The era of growth in global oil demand will end in the next 10 years, but in the absence of a big change in government policies, I see no clear sign of a peak,” he said. IEA chief Fatih Birol told Reuters. .

The Organization of the Petroleum Exporting Countries (OPEC) also forecast a slower recovery in demand on Tuesday.

In a monthly report, he said oil demand will increase from 6.54 million b / d next year to 96.84 million b / d, which is 80,000 b / d less than expected earlier. a month.

Social restrictions were being tightened in Britain and the Czech Republic to tackle the rise in COVID-19 cases, and French Prime Minister Jean Castex has said he cannot rule out local lockdowns.

On the supply side, workers returned to US rigs in the Gulf of Mexico after Hurricane Delta and Norwegian workers to offshore rigs after ending a strike.

The United Arab Emirates (UAE) Energy Minister said on Tuesday that OPEC + oil producers will stick to their plans to cut oil production from January.

OPEC member Libya also lifted force majeure on its Sharara oil field on Sunday.

Libya’s total output on Monday is expected to reach 355,000 bpd while a full return of the 300,000 bpd Sharara field would nearly double.

“In order for prices to continue to rise, we believe that OPEC +’s high spare capacity needs to be reduced. This is why we describe the oil market as artificially, and not structurally, strained today. The group can easily respond to any major disruption in production by using its excess production capacity to speed up production in the event of a price spike, ”UBS analysts said in a note.

Weekly US oil inventory data is delayed by one day due to the Columbus Day federal holiday.

Additional reporting by Ahmad Ghaddar in London, Sonali Paul and Shu Zhang; Edited by David Gregorio, Marguerita Choy and Mark Potter

Original © Thomson Reuters

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