Oil prices extend gains in Asian trade
Both main crude contracts have rallied since hitting six-year lows in late August, with last week seeing healthy rallies in line with global equities on waning expectations the US Federal Reserve will hike borrowing costs this year, pushing the dollar lower.
A softer dollar makes dollar-priced oil cheaper, spurring demand.
Comments by OPEC secretary general Abdullah el-Badri at the weekend that the cartel sees a “more balanced” oil market next year also provided support.
In afternoon Asian trade, US benchmark West Texas Intermediate for November delivery rose 0.89 percent to $50.07 and Brent crude for November added 0.91 percent to $53.13 a barrel.
Attention is on the release of Chinese trade and inflation data, which will give a fresh idea about the state of the world’s biggest energy consumer. Confidence was given a lift at the start of the month by a report indicating the country’s key manufacturing sector saw a slight improvement in September.
The news provided some cheer after a string of figures highlighting a sharp slowdown in Chinese growth. Fears about the Asian economic giant were inflamed in August when authorities devalued the yuan currency, raising questions about their grip on the crisis.
Bernard Aw, market strategist at IG Markets Singapore, said Monday’s price rise was bolstered after el-Badri said Sunday: “OPEC is confident that it will see a more balanced market in 2016.
“In recent months, there has been a contraction in production from non-OPEC producers and an increase in global demand.”
The comments meant the oil producers’ cartel — which accounts for about 40 percent of global production — “still sees stronger demand in the medium term”, Aw told AFP.
Despite the recent uptick, oil prices remain depressed owing to concerns about demand as the global economy stutters, a supply glut and the weakness in China.