Global oil prices traded firmly higher Monday, extending gains from the strongest quarter in a decade, after stronger-than-expected factory output data from China and ongoing production cuts from OPEC member and its allies raised the prospect of increasing demand into the summer months.
A private reading of China's manufacturing industry for the month of March, published Sunday, showed the closely-watched gauge topped the 50 mark that separates growth from contraction for the first time in four months, hitting 50.8 points, and rose the most in eight months as the impact of $300 billion in planned stimulus from Beijing starts to filter through the the world's second-largest economy, and biggest energy consumer.
"The subindex for new orders climbed to its highest level in four months, and the gauge for new export orders returned to expansionary territory, showing that both domestic and external demand rebounded moderately," said CEBM Group economist Zhengsheng Zhong. "Overall, with a more relaxed financing environment, government efforts to bail out the private sector and positive progress in Sino-U.S. trade talks, the situation across the manufacturing sector recovered in March. The employment situation improved greatly."
Brent crude contracts for June delivery, the global benchmark for oil prices, were marked $1.37 cents from their Friday close in New York and changing hands at $68.95 per barrel in early afternoon dealing while WTI contracts for May delivery were seen $1.31 higher at $61.45 per barrel.
Crude was also getting a boost from OPEC's ongoing production cuts which, along with support from key allies such as Russia, are taking more than 1.2 million barrels from the market each day. That, along with sanctions on the sale of Venezuelan oil, as well as renewed pressure from the U.S. State Department on buyers of Iranian crude, has lifted WTI contracts nearly 43% since Christmas Eve and some 33% for the first three months of the, the strongest quarterly gain since 2009.
Speculators are also adding to bullish bets on crude, according to US Commodity Futures Trading Commission data, with net long positions at the highest levels in more than five months.
Crude's ongoing rebound has also has also lifted U.S. oil majors notably higher, with Chevron Corp. (CVX) - Get Chevron Corporation Report some 15% to the upside at $125.048 each since the start of the year, and rival Exxon Mobil (XOM) - Get Exxon Mobil Corporation Report 19.5% higher at $81.23 each.