Fri, March 29, 2024

Brent Oil Hits 5-month High on Abu Dhabi Supply Cuts

The oil pump

Oil was up in Commodities on Monday, with Brent hitting the highest in five months. It was underpinned by a 30% cut in Abu Dhabi crude supplies. 

This encourages Chinese data even as global demand struggles to return to pre-COVID levels in a well supplied market.

Brent crude futures for November (LCOc1) advanced to $46.50 a barrel. That occurred by 0853 GMT, up 69 cents, or 1.5%. 

Further in energy commodities, U.S. West Texas Intermediate crude (CLc1) was at $43.48 a barrel. It was up 51 cents, or 1.2%.

Brent is to end the month with a fifth successive monthly price rise. WTI is on track for a fourth monthly gain, having hit a five-month high of $43.78 a barrel. That was when Hurricane Laura struck on Aug. 26.

Abu Dhabi National Oil Company on Monday told its customers that it will reduce October supplies by 30%. That’s up from a 5% cut in September. 

The supply reduction was directed by the United Arab Emirates government to meet its commitment on the recent OPEC+ agreement.

The gradual recovery of demand will allow the market to better absorb the inventory glut from earlier this year. This was a statement from OCBC economist Howie Lee.

Oil: Continuing Efforts

Energy companies continued efforts to restore operations. These were in the U.S. Gulf Coast offshore platforms and refineries that are still shut down since before the storm.

Commodity news reports a weak USD and Monday’s survey surprisingly showed strength in China’s services sector-supported oil prices. This was even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain ample. 

This was according to analysts, cautioning of hurdles for crude going forward.

Oil most likely slowly grind higher in modest steps, not explode out of the wellhead higher. This was according to OANDA’s Asia-Pacific analyst Jeffrey Halley.

Furthermore, Abundant near-term supplies and the fragility of the global recovery tempered price gains, Halley added.

China’s September crude imports are set to fall for the first time in five months. 

Data showed record volumes of crude are stored in and outside of the world’s largest importer. Meanwhile, Gold was up on Monday morning in Asia.

Investors were turning to the safe-haven asset as the dollar weakened. China and Japan also released data showing mixed signs of their economic recovery from COVID-19.

Gold futures were up 0.20% at $1978.85 while the dollar inched down on Monday.

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