NEW YORK (Reuters) – Oil futures gained over 1% on Monday on hints the Organization of the Petroleum Exporting Countries (OPEC) and its allies may agree to deepen output cuts at a meeting this week and as rising manufacturing activity in China suggested stronger demand.
FILE PHOTO: Oil pump jacks at sunset near Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz/File Photo
Brent futures for the most active contract for February delivery were up 76 cents, or 1.3%, to $61.25 a barrel by 11:39 a.m. EST (1639 GMT), while U.S. West Texas Intermediate (WTI) crude was up 89 cents, or 1.6%, to $56.06.
That is down a bit from earlier in the day following the release on Monday of data showing U.S. factory activity contracted further in November amid a slump in new orders while construction spending unexpectedly fell.
The U.S. reports came on the heels of upbeat October data on the goods trade deficit, housing and manufacturing that led economists to boost their gross domestic product estimates for the fourth quarter.
OPEC and its allies including Russia, meanwhile, are expected to extend output cuts this week and could increase the size of the curb by at least 400,000 barrels per day (bpd), two sources said.
“There is a discussion about a deeper cut taking place,” an OPEC source said, citing forecasts of oversupply in the first six months of 2020. “There is a big stock build in the first half of the year – we need to keep an eye on that.”
The so-called OPEC+ group has coordinated output for