Futures added 1% after the dollar extended losses to the lowest level since May 2018, making commodities priced in the currency more appealing. In China, a private gauge of factory activity grew at the fastest pace in August since January 2011, suggesting a renewed pick-up in demand. Focus is also turning to American inventories, with crude stockpiles expected to have shrunk by 2 million barrels week, according to a Bloomberg survey.
“Risk-on mode is partly the driver of oil prices,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. The market is also getting “support from better-than-expected PMI data out of China.”
Oil capped a fourth monthly gain in August but has struggled to hold above $43 as increasing coronavirus infections raise concerns about the sustainability of the demand recovery. On the supply side, U.S. government figures due Wednesday are expected to show crude stockpiles fell for a sixth week, the longest run of declines this year.
Saudi Arabia’s crude shipments rose slightly last month, tanker-tracking data compiled by Bloomberg show, just as the kingdom continues to grapple with uneven demand. OPEC’s biggest producer may slash the price of its flagship Arab Light crude by $1 a barrel for October sales to Asian customers, according to a Bloomberg survey.
Virus cases in America have topped 6 million, while Covid-19 fatalities in India have surpassed Mexico’s as major economies struggle to contain outbreaks. Still, AstraZeneca Plc has started a large-scale human trial of its coronavirus vaccine in the U.S., with any vaccine eventually limiting the need to return to full lockdowns.
“It looks like things are starting to stabilize, that we’re seeing positive signs that we’re moving in the right direction,” Norway Petroleum and Energy Minister Tina Bru said about the oil market in a webcast session of the ONS Conference. “Still, there’s a lot of uncertainty.”
–With assistance from James Thornhill and Mikael Holter.