Oil rose to trade near $43 a barrel in New York, with support from a weaker dollar and expectations of a further decline in U.S. stockpiles.
Futures added 1.1% after the dollar extended losses to the lowest level since May 2018, making commodities priced in the currency more appealing. American crude inventories may have shrunk by 2 million barrels last week, according to a Bloomberg survey. Meanwhile, healthier manufacturing data in China suggested a renewed pick-up in demand.
West Texas Intermediate crude rose 0.7% to $43.14 a barrel. Brent crude rose 0.7% to $45.89 a barrel.
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. Yet 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. In China, a private gauge of factory activity grew at the fastest pace in August since January 2011.
PREVIOUSLY: Oil edges lower in midst of virus-induced demand slump
“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.”
AstraZeneca Plc has started a large-scale human trial of its coronavirus vaccine in the U.S. as many major economies still struggle to contain outbreaks. Virus cases in America have topped 6 million, while Covid-19 fatalities in India have surpassed Mexico’s.
Grappling with uneven demand, top crude exporter Saudi Arabia 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.
Meanwhile, the biggest producer in the United Arab Emirates signaled it may cut output in October to meet the country’s target under the OPEC+ agreement.
©2020 Bloomberg L.P.
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