DTN Oil

WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied Monday with the move by the West Texas Intermediate contract above $42 barrel (bbl) on the spot continuous chart spurred by reports of progress in U.S. stimulus talks after President Donald Trump signed executive orders to extend some parts of coronavirus relief.

Further boosting the complex, industrial data out of China showed its factory output continued to improve last month as global demand for Chinese manufacturing goods picked up again midsummer, according to the National Bureau of Statistics. China saw its foreign trade gain 6.5% year-on-year in July, with exports and imports up 10.4% and 1.6%, respectively, official data showed. China's fuels consumption has been one of the major drivers of global demand recovery as it exited coronavirus related lockdown prior to many of the Western economies.

Domestically, gasoline consumption flattened out in July, the peak month for driving season, which is likely to pressure oil prices in coming weeks. Four-week average demand for the period ended July 31 was 8.6 million barrels per day (bpd), down roughly 9.1% versus last year's levels, according to official data from U.S. Energy Informational Administration. That correlates closely with private mobility data showing little improvement in traffic volumes on U.S. roads over the last four weeks.

Oil futures also found some support after U.S. President Donald Trump said House Speaker Nancy Pelosi and Senator Chuck Schumer wanted to meet with him to make a deal on coronavirus-related economic relief. That follows a string of executive actions signed over the weekend, which includes extension of the moratorium on evictions, $400 in weekly supplemental unemployment aid and deferral of payroll tax for U.S. businesses. "Fiscal policy has been unbelievably important in supporting the economy. It continues to be important because we have not got control over the virus spread. Another supportive package is really important," said Chicago Fed President Charles Evans on Monday.

Markets seem to have welcomed the move by the White House, with expectations building for both parties to finally come to a comprehensive agreement this week. The Dow Jones Industrial surged over 300 points on the session and S&P 500 was up 0.23%.

Separately, a survey by S&P Platts found crude production from Organization of the Petroleum Exporting Countries and allied partners increased ahead of schedule in July, with quota compliance slipping to 96% from 106% the prior month. The OPEC+ coalition collectively pumped 32.92 million bpd last month, up by 1.06 million bpd from June, per the survey, though much of that increase is attributed to Saudi Arabia, Kuwait and United Arab Emirates phasing out their voluntary cuts of 1 million bpd. Nigeria and Iraq, the two laggard members, continued to produce above their quotas last month even as both pledged to adhere to better compliance. OPEC+ output is set to rise even further in August, with the coalition hiking its quotas by about 2 million bpd in anticipation of higher global oil demand.

On the session, September WTI gained 72 cents to finish at $41.94 bbl and the international Brent crude contract settled up 59 cents to $44.99 bbl. NYMEX ULSD September futures advanced 1.70 cents to $1.2369 gallon and front-month RBOB futures moved up 2.17 cents to finish at $1.2293 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com

(c) Copyright 2020 DTN, LLC. All rights reserved.