Rising Demand And Strong China Factory Performance Cause Crude Price Uptick

But analysts are still worried about the market's lack of direction: File Image/PixaBay

Once again, crude traders on Monday failed to be swayed by media's 24/7 obsession with rising Covid infections and instead caused the commodity's prices to rise, on the strength of growing energy demand and factories in China reportedly returning to pre-pandemic levels.

Oil was also supported by U.S. president Donald Trump stating that top congressional Democrats wanted to meet with him on coronavirus-related economic relief after talks between the two parties broke down last week.

Brent on Monday settled up 59 cents, or 1.3 percent, to $44.99 per barrel, while West Texas Intermediate was up 72 cents, or 1.8 percent, to $41.94 per barrel.

China's factory deflation eased in July, driven by a rise in global oil prices, and on Sunday Amin Nasser, CEO of Saudi Aramco, said he sees oil demand rebounding in Asia as economies gradually open up.

Nasser's optimism was impressive, given that his company reported a 50 percent fall to $23.2 billion for the first half of its financial year; in revealing these figures, Nasser said, "The worst is likely behind us; we remain fairly positive about the long term demand for oil."

Nasser's positive mindset may have been bolstered by the kingdom's health minister announcing that Phase III clinical trials of a Covid vaccine developed by China's CanSino Biologics Inc. will soon begin; other potential vaccines developed by China have already been approved for Phase III trials overseas.

John Kemp, commodities analyst for Reuters, was less bullish about market prospects in the near term: on Monday he  wrote that "Hedge funds' oil trading largely dried up last week as the normal summer holiday slowdown was compounded by an absence of price or fundamental signals about the future direction of the market."

He added, "The market remains in the same holding pattern that has prevailed since the start of July."

For the near-term, Benjamin Jones, a senior multi-asset strategist at State Street Bank, noted that "The main focus for markets is whether the U.S. can agree on the next round of fiscal stimulus."