Oil prices rose on Monday, as OPEC+ producers almost fully complied in July with their global production cut accord, and after U.S. officials said China is in compliance with the first phase of the two nations' trade deal.
Compliance with OPEC+ oil output cuts is seen at around 97% in July, two OPEC+ sources told Reuters. The oil-producing nations have been cutting output by record levels to curb supply and reduce worldwide inventories.
China is living up to its end of the trade deal the two parties signed in January, U.S. President Donald Trump said Monday, even though the nation has fallen short so far of promised purchases of U.S. products. Chinese state-owned oil firms have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September.
Investors are waiting on a ministerial OPEC+ committee, known as the JMMC, on Wednesday that will review the oil market and compliance with the global oil supply reduction pact, although no change in the agreement is expected.
In August, the Organization of the Petroleum Exporting Countries and allies known as OPEC+ eased its agreed cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd previously. Later-dated Brent futures contracts suggest that traders see inventories remaining high in coming months due to weakened demand.
Last week the Energy Information Administration adjusted global oil demand downward, suggesting a smaller than previously expected reduction in global inventories.
"Floating inventory could even begin to increase again as WTI and Brent spread carrying charges expand," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.