Oil gained following the broader risk-on sentiment in markets, and as OPEC+ inches closer to delaying a planned easing of output cuts.
Futures in New York climbed near $38 a barrel after rising 2.9% in the previous session. Equities were rallying ahead of the U.S. election, while the dollar lost 0.5%, adding to positive sentiment in crude.
West Texas Intermediate crude surged 3.6% to $38.15 a barrel.
On Monday, Energy Minister Alexander Novak met with Russian producers to discuss delaying an easing of production cuts by three months. The Organization of Petroleum Exporting Countries and its allies were set to add almost 2 million barrels a day of supply from January, but the group’s secretary general said Tuesday that demand is recovering at a “very slow speed.”
The rest of the week promises to be as turbulent as the start, with Americans heading to the polls on Tuesday for an election that could reshape U.S. policy on everything from fiscal stimulus to Iran and fracking. China, meanwhile, remains the bright spot for global demand, with authorities raising the quota for use of overseas oil by non-state entities next year by more than 20%.
PREVIOUSLY: Oil climbs with Russia in talks on delaying OPEC+ output hike
“All eyes will be on the U.S. election today and tomorrow,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “It would definitely be a relief for the market if it did not have to worry about an additional 1.9 million barrels a day of supply coming into the market at the start of January,” Schieldrop said of OPEC+’s plans to delay its output hike.
The rise in the Chinese import quota, which is equivalent to about 823,000 barrels a day, is largely due to refining capacity expansions by Zhejiang Petrochemical and Shenghong Petrochemical Group. Chinese oil buying has picked up in recent weeks with traders hoarding cargoes of everything from Russian to Angolan crude in preparation for the new quota.
Russia’s Novak said that uncertainty is preventing a return to pre-Covid oil demand levels. While there are new lockdowns in Europe, they aren’t as severe as earlier in the year, he said.
©2020 Bloomberg L.P.
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Oil gains on weaker dollar, OPEC+ hints at delaying output hike - Houston Chronicle
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