London — 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 in history in October on a daily basis, while new lockdowns in the US and Europe weighed on demand.
Brent crude futures for January were up 78 US cents, or 1.8%, to $43.56 a barrel by 9.50am GMT, while US West Texas Intermediate crude for December was at $40.96, up 83c 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 Opec and its allies, including Russia, would maintain lower output in 2021 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 two-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 November 30 and December 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 oil prices today are not $20 a barrel. As such, their upcoming meeting on November-December 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 US has dampened fuel demand recovery hopes this northern hemisphere winter.