Oil prices surged as strong European manufacturing data assisted in offsetting demand worries as a second COVID-19 wave spread across the entire continent. In New York, the crude futures traded up 0.4% but later headed for a weekly decline.
Curfews around Europe have increased amid fresh outbreaks. But, European factory figures have beat expectations which suggests that industrial activity is holding up well despite the multiple restrictions on the movement of people. The dollar also plummeted which boosted oil.
Notably, West Texas Intermediate crude gained 0.3% to reach $40.78 a barrel.
With the oil futures stuck below $41 per barrel, the attention is now shifting to the next major events coming up on the horizon: An OPEC+ meeting scheduled for the end of next month and the forthcoming US presidential election.
On October 22, Russia said for the first time that it is ready to delay an oil-output hike that is planned for January 2021. In the meantime, American presidential candidate Joe Biden stated that fossil fuels require phasing out over some time. That comment was seized on by Donald Trump as an overly dangerous threat to the oil sector.
Positive News For Oil Market
Hans van Cleef, senior energy economist at ABN Amro, said:
“At the moment, there is little that seems to change this playing field for the oil market. However, two crucial events — namely the U.S. elections on Nov. 3 as well as the OPEC+ meeting at the end of November — may cause the oil market to move significantly in the coming weeks.”
Great manufacturing data in Europe is the most recent sign that corners of the market are proving quite resilient amid the pandemic. In a potential boon for diesel demand, the continent’s trucking company said that this week that its volumes are set to rise almost 10% in 2020.
Another positive news for crude is the return in Asian demand in recent weeks. Purchases by a Chinese major refiner has enabled the tightening of the market, with Oman crude trading at a premium to the set Middle Eastern Dubai benchmark for the first time in around two months on October 22.