Oil futures rose Monday, buoyed after signs of a rebound in manufacturing activity in China as well as the potential for OPEC and its allies to agree on deeper production cuts when they meet later this week.
West Texas Intermediate crude for January delivery CLF20, +2.23% rose $1.22, or 2.2%, to $56.39 a barrel on the New York Mercantile Exchange, while February Brent crude BRNG20, +2.02%, the global benchmark, advanced $1.31, or 2.2%, to $61.80 a barrel.
Oil rose alongside global equity markets after data showed a pickup in manufacturing activity in China.
The Caixin manufacturing purchasing managers index rose to 51.8 in November from 51.7 in October, Caixin Media Co. and research firm Markit said Monday — with the reading remained above the 50 level that separates expansion from contraction. Earlier, China’s official manufacturing PMI reading moved back into expansion activity, rising to 50.2 in November from 49.3, according to the country’s National Bureau of Statistics, marking the first reading above 50 for the index since April.
Meanwhile, developments around meetings of members of the Organization of the Petroleum Exporting Countries, or OPEC, and its allies on Thursday and Friday could set the tone for markets this week. Crude was finding support after remarks by Iraq’s oil minister over the weekend signaled that OPEC and its allies, known as OPEC+, would consider deepening cuts by 400,000 barrels a day to 1.6 million barrels.
“This differs from expectations last week, where there was a growing consensus that we would only see an extension to the deal, rather than deeper cuts as well,” said Warren Patterson, head of commodities strategy at ING, in a note. “Cuts of this magnitude, along with full compliance, would do a good job in reducing the expected surplus over 1Q20, however, would still fall short of erasing it completely.”
January natural-gas futures NGF20, +2.54% were up 1.6% at $2.316 per million British thermal units.