Oil was up Monday morning in Asia. However, a resurgence of COVID-19 globally continues to take an economic toll and dampen fuel demand.
Brent oil futures were up 0.29% to $55.18 by 8:41 PM ET (1:41 AM GMT) and WTI futures inched up 0.06% to $52.23. Both Brent and WTI futures remained above the $50 mark, however.
Continuous fuel demand worries stalled a rally in oil that started at the beginning of November. However, the futures curve points to a more balanced market as WTI and Brent futures move further into backwardation, indicating a tightness in supply, despite headline prices treading water.
Chinese data released over the weekend disappointed, with lower-than-expected manufacturing and non-manufacturing purchasing managers indexes (PMI) reported on Sunday. The manufacturing PMI was 51.3, against the 51.6 in forecasts prepared by Investing.com and December’s 51.9. The non-manufacturing PMI came in at 52.4, against December’s 55.7.
The data also indicates that efforts to curb resurgent COVID-19 outbreaks in the country are slowing down the economic recovery as the Lunar New Year holiday approaches. Investors await the Caixin manufacturing PMI, due later in the day, and the Caixin services PMI, due later in the week.
Demand worries also continue in the world’s largest economy. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, warned on Sunday that the new COVID-19 variant circulating in the U.K. could become the dominant strain in the U.S., potentially leading to future restrictions on in-person gatherings.
However, discipline on the part of producers helped to check the black liquid’s losses. The Organization of the Petroleum Exporting Countries and its partners, or OPEC+, reportedly implemented an estimated 99% of the agreed-to production cuts in January. OPEC members’ cuts implementation were at 103% in January, while those for non-OPEC partners, including Russia and Kazakhstan, were at 93%.
The cartel’s Joint Technical Committee will present its assessment to the Joint Ministerial Monitoring Committee (JMMC) that will meet on Wednesday. The JMMC is also reportedly unlikely to recommend any policy changes.
Meanwhile, Chevron Corp. (NYSE:CVX) awaits further clarity on the COIVID-19 and OPEC trajectories before resuming an increase in shale output.