Oil rose above $43 a barrel in New York to its highest closing level since early March amid a broader rally in equities and as China’s economic recovery continued. West Texas Intermediate futures snapped a two-day drop, rising 1.4% as of 2:34 p.m. in Dubai, while Brent crude for November settlement climbed around the same amount to $46.47. Data showed that China rebounded further in August as the world’s second-largest economy emerges from its coronavirus-induced slump. That helped push up global stocks for a second day, while U.S. Treasuries fell as investors moved out of havens.

Goldman Sachs Group Inc. in a note Sunday raised its year-end forecast for WTI to $45.50 from $40, and for Brent to $48 from $43.

Oil remains in a persistent contango indicating ample supplies

Even so, concerns that nations across the globe have yet to contain the virus are anchoring the WTI price around $43. The market is also contending with increasing production from OPEC+ countries as the group eases its historic output cuts from earlier in the year. And signs have emerged that Chinese crude purchases are starting to slow. U.S. Gulf Coast refineries, meanwhile, are restarting following Hurricane Laura, which mostly spared the region’s energy infrastructure, muting its impact on global markets. Laura was one of the most powerful hurricanes to ever hit Louisiana and U.S. Gulf Coast refiners halted around a third of gasoline and diesel production as the storm approached.

But hopes of prices edging toward $50 a barrel by September were “wishful thinking,” said Eugen Weinberg, Commerzbank AG’s head of commodity research. If oil stays at today’s levels, U.S. shale production probably won’t increase, he said. U.S. explorers parked more rigs last week as stagnant prices push the industry to curtail activity. The number of active machines fell by three to 180, according to Baker Hughes Co. data released Friday.

“Oil still looks positive, but it’s going to grind higher rather than race because there are still concerns regarding the consumption side of the equation,” said Jeffrey Halley a senior market analyst for Asia Pacific at Oanda. “Whichever countries opened up, Covid-19 has made a return.”

PRICES
  • West Texas Intermediate for October delivery added 56 cents to $43.53 a barrel on the New York Mercantile Exchange as of 1:51 p.m. Dubai time after falling 1% in the previous two sessions
    • Futures are up 8% this month
  • The one-month timespread has been in a contango above 30 cents for most of the month, signaling concerns about over-supply
  • Brent for November settlement gained 1.4% to $46.47 on the ICE Futures Europe exchange after rising 0.5% on Friday
    • The contract is up almost 6% this month
  • A gauge of the services industry in China was at the strongest level since early 2018, while the expansion in manufacturing activity slowed slightly. The non-manufacturing gauge rose to 55.2 from July’s 54.2, the National Bureau of Statistics said Monday