Oil prices surged over 1% on Monday as signs of advancing manufacturing activity in China pointed to growing fuel demand, and hints that OPEC may deepen production cuts at its meeting this week indicated supply might tighten next year.
Brent crude futures jumped up 76 cents, i.e.,1.3%, to $61.25 per barrel. West Texas Intermediate futures surged 91 cents, i.e., 1.7%, to $56.08 per barrel, having risen by over $1 earlier.
WTI futures Friday settled 5.1% lower while Brent jumped 4.4% on concerns that discussions to settle the trade conflict between the U.S. and China, the world’s two biggest oil users, would be obstructed by U.S. support for demonstrators in Hong Kong.
But oil prices rose on Monday following factory activity in November in China, the world’s biggest oil buyer, increased for the first time in seven months because of rising domestic demand amid government stimulus measures.
Prices had also been supported after Iraq’s oil minister stated Sunday that OPEC and members would consider deepening their existing oil production cuts by around 400,000 barrels per day (bpd) to 1.6 million bpd.
OPEC+ group is anticipated to at least extend current production cuts to next year June, when they gather this week.
The OPEC+ group has coordinated output for three years to offset the market and support prices. Their existing deal to pare supply by 1.2 million bpd that began from January expires at the end of March 2020.
OPEC’s ministers will meet in Vienna on December 5, and the wider OPEC+ group will meet on December 6.
Ministers will either extend the cuts without change, take no action, or increase them, ING Economics said.