Oil gained, following a broader risk-on sentiment in markets and as OPEC+ inches closer to delaying a planned easing of output cuts.
Futures in New York rallied near $38 a barrel after rising 2.9% in the previous session. Equities were rallying ahead of the US election, while the dollar lost almost 0.5%, adding to positive sentiment in crude.
On Monday, Energy Minister Alexander Novak met with Russian producers to discuss delaying an easing of production cuts by three months. The Organization of Petroleum Exporting Countries and its allies have been dropping hints for weeks that its plan to add almost 2 million barrels a day of supply from January is being reconsidered as demand falters.
The rest of the week promises to be as turbulent as the start with Americans heading to the polls on Tuesday for an election that could reshape US policy on everything from fiscal stimulus to Iran and fracking. China, meanwhile, remains the bright spot for global demand, with authorities raising the quota for use of overseas oil by non-state entities next year by more than 20%.
“All eyes will be on the US election today and tomorrow,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “It would definitely be a relief for the market if it did not have to worry about an additional 1.9 million barrels a day of supply coming into the market at the start of January,” Schieldrop said of OPEC+’s plans to delay its output hike.
The rise in the Chinese import quota, which is equivalent to about 823,000 barrels a day, is largely due to refining capacity expansions by Zhejiang Petrochemical and Shenghong Petrochemical Group. Chinese oil buying has picked up in recent weeks with traders hoarding cargoes of everything from Russian to Angolan crude in preparation for the new quota.
Even as OPEC and its allies look likely to delay adding more output, some members — including Iraq and Nigeria — are seemingly undermining the group’s efforts to shore up oil markets. Production from OPEC jumped by 470,000 barrels a day in October to 24.74 million a day, according to a Bloomberg survey.