World’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day.
Oil prices edged up on Monday after China’s factories unexpectedly ramped up production in September, easing concerns about demand at the world’s largest crude importer amid an ongoing trade war with the United States.
Brent crude futures rose 9 cents to USD 62 a barrel by 0300 GMT while US West Texas Intermediate (WTI) crude futures rose 13 cents to USD 56.04 a barrel.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for September expanded for a second straight month as Chinese factories ramped up production and new orders rose, beating market expectations.
“The Caixin data was a real surprise and should be positive for Asia’s markets today,” said Jeffrey Halley, OANDA senior analyst in Singapore.
He added that the data would need to post similar results over the next few months to point to a China oil demand growth recovery. The country is the world’s second largest oil user.
Brent is set to rise 2.6 per cent in September, its first monthly gain since June, with prices lifted by an unprecedented attack on Saudi’s oil facilities on Sept 14 that reduced its production by half. WTI is set to rise 1.7 per cent this month. .
World’s top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day, sources told Reuters last week although Saudi Aramco has yet to confirm it is fully back online.
“Most of this is already priced in when the Saudis said they were going to do it (resume production) fast,” said Avtar Sandu, a senior commodities manager at Phillip Futures in Singapore.
While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, how much of it is actually restored could only be determined in the next few weeks, he added.
Still, geopolitical tensions in the Middle East simmered after Saudi Arabia’s crown prince warned in an interview broadcast on Sunday that oil prices could spike to “unimaginably high numbers” if the world does not come together to deter Iran, but said he would prefer a political solution to a military one.
This came a day after Yemen’s Houthi movement said it had carried out a major attack near the border with the southern Saudi region of Najran and captured many troops and vehicles, but there was no immediate confirmation from Saudi Arabian authorities.