Oil prices rose on Monday, supported by tighter supplies and a string of data expected to show economic recovery across the globe and despite a spike in coronavirus cases in the United States and other countries. Brent crude was up 73 cents, or 1.7 per cent, to $43.53 per barrel by 1:38 pm. US West Texas Intermediate (WTI) crude was up 28 cents, or 0.7 per cent, at $40.93. “The market appears to be shrugging off the surge in COVID-19 cases in the United States,” ING said, adding that data for several cities in affected states did not show a significant reduction in road traffic week on week.
Market sentiment was also positive as investors expected a string of improving economic data.
In China, the economy is recovering while its capital markets are attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial on Monday. Traders were also keeping an eye on US non-manufacturing activity, German industrial orders for May, and retail sales for the eurozone, all due on Monday and all expected to be positive.
The implied volatility for Brent crude has dropped to its lowest level since prices started collapsing in March as markets remain focused on tightening supplies as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest in decades.
OPEC and other producers including Russia, collectively known as OPEC+, have agreed to lower output by a record 9.7 million barrels per day (bpd) for a third month in July.
“While risks on the demand side are weighing on prices, the good discipline with OPEC+ is lending support,” Commerzbank analyst Eugen Weinberg said.
Saudi Arabian oil producer Aramco raised August official selling prices (OSPs) for its Arab light crude.
US production, the world’s largest, is also falling. The number of operating U.S. oil and natural gas rigs fell for a ninth week, although the reductions have slowed as higher oil prices prompt some producers to start drilling again.
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