Americas News
Oil Rises On Strong Manufacturing Data
The mantra from analysts that increasing Covid infections threatens demand recovery was put into question yet again on Monday, this time by strong factory data in Asia and the U.S. - which in turn caused oil prices to rise nearly 3 percent.
Brent on Monday gained $1.03, or 2.7 percent, to settle at $38.97 per barrel, while West Texas Intermediate ended $1.02, or 2.9 percent, higher at $36.81 per barrel.
Although U.S. manufacturing activity grew more than expected in October with new orders reaching their highest level in nearly 17 years, analysts said the real immediate influence on oil prices will be the outcome of the presidential election in that country.
Harry Tchilinguirian, analyst at BNP Paribas, said, "The concerns over oil supply and demand fundamentals ... are going to play second fiddle to the U.S. presidential election and to how risk markets will react to the outcome."
The analytical community is also maintaining its dim view of demand resiliency in the face of new lockdowns in Europe: Artyom Tchen, analyst for Rystad Energy, remarked that they "will stunt economic recovery in the short-term and in the long-term and the pandemic will also leave behind a legacy of behavioural changes that will also affect oil use."
Rystad predicts that Covid in 2020 will drive down global demand to 89.3 million barrels per day (bpd) from 99.6 million bpd in 2019, before a partial recovery to 94.8 million bpd next year and a return to around 100 million bpd in 2023.
The Oslo-based consultancy also forecast that demand for crude will decline by 2050 to around 62 million bpd.
Meanwhile, positive news on Monday was being reported in one of the most unlikely places, namely Canada's devastated oil industry: although some companies continued to post big losses in the third quarter, the Canada Energy Regulator reported that all but 270,000 bpd of 972,000 bpd that were cut during the spring have been restored.
Cenovus Energy Inc. is expected to raise production in December as is MEG Energy Corp., and Suncor Energy Inc. will likely increase output by 10 percent next year.
