Oil futures rose Monday, on track to end a positive August on an upbeat note after data showed a stronger-than-expected pickup in China’s service sector.
West Texas Intermediate crude for October delivery rose 32 cents, or 0.7%, to $43.29 a barrel on the New York Mercantile Exchange. November Brent crude, the global benchmark, was 37 cents higher, a gain of 0.8%, at $46.18 a barrel on ICE Futures Europe.
Based on the most actively traded contracts, WTI was on track for a monthly gain of 7.5%, while Brent was headed for a 6% rise. Oil’s gains have accompanied a global rally in equities that has the U.S. market on track for its strongest gain in more than three decades as well as a sliding U.S. dollar.
“The general market optimism and the weak U.S. dollar on the one hand, coupled with a tighter supply-demand situation thanks to the disciplined implementation of the OPEC+ strategy on the other, are lending support to oil prices,” said Eugen Weinberg, analyst at Commerzbank, in a note.
The OPEC+ alliance of producers has largely complied with its self-imposed production curbs. Meanwhile, the U.S. dollar has continued to weaken versus major rivals, with the ICE U.S. Dollar Index on track for a 1.2% August drop after a fall of more than 4% in August. A weaker dollar is seen as supportive to commodities priced in the currency, making them less expensive to users of other currencies.
Weinberg noted that the reaction of non-OPEC producers to the rebound in oil prices over the past few months has also remained muted.
Meanwhile, oil bulls were cheered by data out of China. The country’s official nonmanufacturing purchasing managers index rose to 55.2 in August, up from 54.2 in July, the National Bureau of Statistics said Monday. The August reading was the sixth consecutive expansion after the gauge in February was fell well below the 50 mark, which separates expansion from contraction.