The reasons behind current oil growth

Oil rose on Monday, supported by an improvement in Chinese factory data and rising energy demand as countries eased coronavirus-related lockdowns, but traders remained cautious due to U.S.-China tensions and uncertainty over a U.S. stimulus package.

Brent crude rose 54 cents, or 1.2%, to .94 a barrel by 0852 GMT, while U.S. West Texas Intermediate (WTI) crude was up 69 cents, or 1.7%, to .91 a barrel.

China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of recovery in the world’s second-largest economy.

Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months. The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.

However, uncertainty over U.S. fiscal stimulus put some pressure on prices. President Trump signed a series of executive orders to extend unemployment benefits after talks with Congress broke down.

Adding to the uncertainty were ongoing tensions between Washington and Beijing. Trump signed two executive orders banning WeChat and TikTok in 45 days’ time while announcing sanctions on 11 Chinese and Hong Kong officials.

Markets will now keep an on a China-U.S. meeting on trade talks scheduled for this weekend.

Oil climbs on positive China data, rising demand, Reuters, Aug 10