Crude oil prices for major benchmarks welcomed the month of September to the positive territory on Tuesday with support from some economic data which indicate signs of recovery.
For the Brent crude, it gained 51 cents or 1.13 per cent to trade at $45.79 per barrel, while the US West Texas Intermediate (WTI) crude futures improved by 15 cents or 0.35 per cent to quote at $42.76 per barrel at the market.
The oil market had performed bearish on Monday but WTI logged its fourth straight monthly rise, while Brent rose for a fifth straight month after the oil price crash.
Things took a turn on Tuesday as traders banked on positive data from top economies, the United States and China.
In the US, on Tuesday, the Institute for Supply Management said its manufacturing index rose to 56 per cent in August, up a fourth month in a row, from 54.2 per cent posted in July.
Equally in China, the Caixin China purchasing managers index, which is weighted toward small and private manufacturers, rose to 53.1 points in August from 52.8 points in July on Tuesday.
August’s reading, the highest level since January 2011, marked the fourth consecutive month the Caixin PMI held above the 50 mark separating contraction from expansion.
Also, the weakness in the Dollar had provided a lift to dollar-denominated oil prices. The US dollar index, which measures the greenback against a basket of international currencies, has fallen over 6 per cent since June.
Oil futures are priced in dollars and a weak Dollar should theoretically push up the price of oil as the greenback’s purchasing power is less.
Oil production by the Organization of the Petroleum Exporting Countries (OPEC) rose by 950,000 barrels per day to 24.27 million barrels per day in August, from July, following a three-decade output low in June.
The move followed a decision by OPEC and its allies to taper collective output cuts to 7.7 million barrels per day starting May 1 from record cuts of 9.7 million barrels a day.
Now, traders will await weekly data on US crude inventories from the American Petroleum Institute (API) and the Energy Information Administration (EIA) on Wednesday (today).
On the average, analysts forecast a 1.2 million-barrel fall in crude inventories for the week ended August 28. A drop might see prices rise on Wednesday, an indicator for balance in the market.
Source: Voice of Nigeria