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

Daniel Fowler
October 18, 2020

Oil prices rose slightly in early trade on Thursday after data showed USA crude stockpiles fell last week, adding to 2% gains overnight, as OPEC and its allies were seen fully complying in September with their pact to curb output.

Brent crude futures LCOc1 for December fell by 6 cents to $42.39 a barrel by 0953 GMT while U.S. West Texas Intermediate CLc1 futures were down 5 cents at $40.15.

Early in the day crude was boosted by a bullish stock market.

Prices of the barrel of the American benchmark for the sweet light crude oil push higher to 3-day peaks beyond the $41.00 mark on Wednesday.

Analysts had predicted an inventory draw of 2.835-million barrels.

Later in the session, the API will publish its weekly report on U.S. crude oil supplies (-3.36M exp.) ahead of Thursday's report from the EIA and Baker Hughes' weekly figures on the USA drilling activity on Friday. Those drawdowns were almost double analysts' expectations in a poll.

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The Organization of the Petroleum Exporting Countries' (OPEC) conformity with the oil output reduction in September was 105%, while non-OPEC compliance was 97%, one of the sources said.

Oil prices strengthened on Wednesday, as OPEC and its allies were seen complying with a pact to cut oil supply in September, even as concerns loomed that recovery in fuel demand will be stalled by soaring global coronavirus cases. USA oil production now sits at 11.0 million bpd, according to the Energy Information Administration-2.1 million bpd under those March highs.

"Crude prices are looking very vulnerable as the coronavirus continues to spread like wildfire across Europe and trending higher in the US", said Edward Moya, a senior market analyst at OANDA.

"The outlook in Asia could be the reason OPEC+ alliance remains confident the market can withstand another 2 million barrels per day in the market", ANZ Research said in a note.

Disclaimer:Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. Therefore Fusion Media doesn't bear any responsibility for any trading losses you might incur as a result of using this data.

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