WASHINGTON (DTN) -- In early trade Monday, nearby delivery month oil futures on the New York Mercantile Exchange and the Brent contract on the Intercontinental Exchange edged higher, with the U.S. benchmark trading just above $40 per barrel (bbl) as the U.S. dollar retreated from Friday's better than two-month high and global equities rallied after overnight data shows a solid economic recovery in China following a pandemic caused slowdown.
China's industrial profits grew for the fourth consecutive month in August, surging 19.1% against a year ago, according to data released by China's Bureau of National Statistics. Global equity markets rallied on the data and the U.S. dollar index fell 0.5% from Friday's 94.795 two-month high, buoying front-month West Texas Intermediate futures.
In early trading, November WTI futures trading near $40.35 bbl, with November Brent futures on ICE trading on either side of $42 bbl ahead of expiration on Wednesday, with the December contract holding a $0.45 premium to the expiring contract. NYMEX October ULSD futures added 0.6 cents to $1.1322 ahead of contract expiration Wednesday afternoon, with the prompt spread at a 0.55cts contango. October RBOB futures were up a little more than 0.5 cents at $1.2195, trading at a 2.7 cents premium to the November contract.
A potential strike at Norwegian oil fields scheduled for Wednesday could halt as much as 900,000 barrels per day (bpd) of crude output, 25% of the country's oil and gas output, according to estimates from the Norwegian Oil and Gas Association. At the Johan Sverdrup field, the largest oil-producing field in western Europe with a 470,000 bpd capacity, 88 workers from Safe and 43 from Lederne would strike this week, including some control-room operators, said officials at the two unions.
Offsetting the bullish dynamic are concerns over elevated levels of coronavirus infections and uneven economic recovery in the United States and European Union, two vital demand centers that have capped oil prices. Nearly eight months into the pandemic, U.S. fuel consumption remains far below the pre-crisis level. The most recent four-week average through Sept. 18 shows implied gasoline demand about 9% below the comparable year-ago level at 8.542 million bpd, according to the U.S. Energy Information Administration.
Commercial oil inventories in countries that are part of the Organization for Economic Cooperation and Development are expected to remain above the five-year average through the second quarter of 2021, according to the new projections from the Organization of the Petroleum Exporting Countries. OPEC's Secretary General Mohammed Barkindo said Sunday global oil demand in 2020 is expected to contract by 9.5 million bpd to about 10% below the last year.
Liubov Georges can be reached at email@example.com
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