Crude oil prices moved higher on Monday as encouraging economic data from the U.S., the Eurozone and China helped ease concerns about energy demand.
However, continued spikes in coronavirus cases in the U.S. and several other countries across the world and the possibility of excess crude supply in the market due to easing of output curbs beginning August 1 capped oil’s rise.
West Texas Intermediate Crude oil futures for September settled at $41.01 a barrel, gaining $0.74 or about 1.8%.
Brent crude futures moved up $0.86 or about 2% to $44.38 a barrel.
An Institute for Supply Management report showed activity in U.S. manufacturing sector accelerated at a bigger than expected pace in July.
The report said its purchasing managers index rose to 54.2 in July from 52.6 in June, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 53.6.
A private survey showed Chinese factory activity expanded at the fastest pace decade in July, helping ease worries about the impact of the Covid-19 pandemic on the global economy. The Caixin manufacturing Purchasing Managers’ Index rose to 52.8 in July from 51.2 in June.
The euro area manufacturing sector returned to growth in July for the first time in a year and a half as output and demand continued to recover with the further easing of restrictions related to the coronavirus disease, final data from IHS Markit showed.
The manufacturing Purchasing Managers’ Index rose to 51.8 in July from 47.4 in June. This was also above the flash reading of 51.1. Both production and new orders returned to growth in July.
The marked expansion in output was registered for the first time since the start of 2019 and the growth in new orders was the strongest since early 2018.
OPEC and allies such as Russia have agreed to trim their output cuts as demand continues to rise to pre-pandemic levels.
Russian oil and gas condensate output increased to 9.8 million barrels per day (bpd) on August 1-2 from 9.37 million bpd in July as the country eases production curbs under an OPEC+ deal, Reuters reported, citing a source familiar with data.
Traders were also worried about the economic fallout from the coronavirus pandemic after coronavirus cases continued to surge in the United States and stood at almost 18 million globally.
According to reports, more countries have imposed new restrictions or extended the current ones to stem the spread of Covid-19 as a global surge of new cases showed no sign of abating.
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