Oil prices were up more than 1 per cent on Monday on positive economic data from the United States, Europe and Asia, but investors remained concerned about rising COVID-19 cases globally and oversupply as OPEC begins to lift supply cuts.
Brent crude settled at $44.15 a barrel, rising 63 cents, or 1.5 per cent. U.S. West Texas Intermediate (WTI) crude rose 74 cents, or 1.8 per cent, to end at $41.01 a barrel.
U.S. manufacturing activity accelerated to its highest level in nearly 1-1/2 years in July as orders increased despite a resurgence in new COVID-19 infections, the Institute for Supply Management said.
A similar survey showed manufacturing activity across the euro zone expanded last month for the first time since early 2019, while positive manufacturing data in Asia also boosted oil.
“The industrial sector is picking back up and that portends well for demand going forward,” said John Kilduff, partner at Again Capital LLC in New York.
Investors, however, continue to worry about the economic recovery as coronavirus cases climb, with known infections reaching almost 18 million globally. More countries are imposing new restrictions or extending existing curbs in an effort to control the pandemic.
The prospect of oversupply also weighed on oil prices as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, prepare to ease oil supply cuts while U.S. shale production begins to increase.
“I think the question is going to remain, as OPEC reduces their production cuts, are we going to continue to see oil inventories around the world decline,” said Andy Lipow or Lipow Oil Associates.
OPEC+ members have been cutting output by 9.7 million barrels per day (bpd) since May. This month, cuts will taper to 7.7 million bpd until December.
Russian oil and gas condensate output increased to 9.8 million bpd over Aug. 1-2, from 9.37 million bpd in July, a source familiar with data said.
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