By Sharon Cho and Alex Longley
The data underscore China’s role in the oil market’s recovery as a renewed coronavirus spread impinges on the rebound in consumption elsewhere. The U.K. is tightening restrictions as infections rise, while Italy and the Netherlands are also considering new measures. Demand will fall 8% this year and only return to pre-crisis levels in 2023, the International Energy Agency said.
“The optimism is spurred by China’s customs data,” said Paola Rodriguez Masiu, senior oil markets analyst at Rystad Energy AS. “China is a major customer for oil and such data against projections were welcomed jubilantly from traders.”
In the latest sign of refiners struggling to cope with tepid consumption, Italy’s Sarroch facility in Sardinia — one of Europe’s biggest and most complex — will operate at the minimum required rate.
Investors are increasingly focusing on how the U.S. election next month is likely to affect oil. A Democratic sweep of the White House and Congress could lead to an increase of Iranian production by 500,000 barrels a day by the third quarter of 2021, JPMorgan Chase & Co. said in a note. However, that would likely be offset by rising demand, and crude prices could increase by 10% to 15% in the month after the election on fiscal stimulus and dollar weakness.