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Oil prices edge up on stimulus support despite ample supplies

Published 31/08/2020, 11:16 am
© Reuters.
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* Brent set for 5th monthly gain; 4th mth for WTI

* Hedge funds cut bullish bets on U.S. crude - CFTC

* U.S. oil, gas rigs up 3 in August - Baker Hughes

By Florence Tan

SINGAPORE, Aug 31 (Reuters) - Oil prices nudged up on Monday, with Brent futures set to post a fifth straight monthly gain, as global stimulus measures underpin prices even as demand struggles to return to pre-COVID levels in a well supplied market.

Brent crude futures for November LCOc1 climbed 27 cents, or 0.6%, to $46.08 a barrel by 0038 GMT, while U.S. West Texas Intermediate crude CLc1 was at $43.11 a barrel, up 14 cents, or 0.3%.

Brent is set to close out August with a fifth successive monthly price rise, having peaked at $46.23 a barrel on Aug. 5, the highest level since March. WTI is on track for a fourth monthly rise, reaching $43.78 a barrel on Aug. 26 when Hurricane Laura struck.

Oil markets largely shrugged off the hurricane's impact on Friday as energy companies continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut before the storm. weak U.S. dollar has supported oil prices even though fuel demand has struggled to recover amid the coronavirus pandemic and supplies remain excessive, although crude may face hurdles going forward, analysts said.

"We believe that the impact of a cheaper dollar from current levels will see a minimal impact on crude purchases, irrespective of slightly more favorable crude pricing," RBC Capital's Mike Tran said in an Aug. 27 note.

"The relationship between demand and price elasticity is blunted in the current environment, because oil is already cheap and readily available and there currently exist a dearth of buyers."

China's crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world's largest importer, data from Refinitiv and Vortexa showed.

Reflecting concerns about rising supplies and sluggish global economic recovery, hedge funds and money managers cut bullish wagers on U.S. crude to the lowest level in nearly four months, data showed on Friday. oil and gas prices are also encouraging U.S. producers to resume drilling as the country's oil and gas rig count rose by three to 254 in August, according to data from energy services firm Baker Hughes Co. Saudi Aramco (SE:2222) discovered two new oil and gas fields in the northern regions, the kingdom's energy minister said on Sunday, state news agency SPA reported.

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