Oil climbs higher on China, Japan rebound, hopes for OPEC

Daniel Fowler
November 17, 2020

Brent crude fell 75 cents, or 1.7 percent, to settle at $42.78 a barrel.

In the past few months, weak demand for fuel amid the pandemic has weighed on the global crude prices.

Benchmark Brent crude jumped 1.8 percent to $43.56 per barrel, while West Texas Intermediate crude futures were up 2.1 percent at $40.99.

For the week, both notched gains of more than 8%.

While oil prices rallied to $45 a barrel in London last week following news of a breakthrough on a Covid-19 vaccine, they remain far lower than most OPEC nations need to cover government spending.

Data showing a rebound in Chinese and Japanese economies also contributed to the change in prices.

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Data released by the American energy services firm Baker Hughes showed that the operating United States oil and natural gas rigs count rose to its highest in the last week since May. Analysts had expected a fall of 913,000 barrels. "We have an overhanging concern over global demand as COVID-19 outbreaks continue around the world".

Analysts say tougher restrictions on mobility to deal with sky-rocketing coronavirus cases mean the Organization of the Petroleum Exporting Countries and its allies may hesitate to loosen output curbs as planned in January The group known as OPEC+ is due to hold a Joint Ministerial Monitoring Committee next week, which will give some indications of what the producers may decide at the next ministerial meeting on December 1.

The coalition - led by Saudi Arabia and Russian Federation - is scheduled to increase crude production by nearly 2 million barrels a day in January, having initially anticipated that a global economic recovery would rekindle fuel demand.

An option gaining support among OPEC+ is keeping the existing supply curbs of 7.7 million bpd for another three to six months, OPEC+ sources said, rather than tapering the cut to 5.7 million bpd in January as now called for.

Monday's meeting will also review compliance with supply cuts, which sources said on Friday stood at a robust 101% in October.

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