Oil prices rose to their highest level in three months after recording a third weekly gain.
It came amid huge optimism for improving oil demand, driven by hopes for an effective coronavirus disease vaccine.
The vaccine may prove to be the proverbial light at the end of the tunnel for refiners who have been idling capacity in response to the pandemic-triggered demand decline. Still, more closures are looming in Europe as refiners continue to battle against weak margins as demand for refined petroleum products is hit by renewed lockdowns.
The picture is somewhat different in Asia where capacity is growing and at a stronger pace than expected.
Refiners in Asia are ramping up in anticipation of the winter peak in demand for heating oil.
While new lockdowns in the US and Europe weighed on demand, Chinese refineries have processed vast quantities of crude in October.
The world’s second-largest economy continues to show signs of improving oil demand as crude imports rose to 11.83 million barrels per day (bpd), showing big improvements on a month-to-month basis.
Reuters reported an additional 100 million barrels in 2021 for private Chinese private refiners’ stockpile, which means that floating storage in China should have been depleted.
OPEC+ producers showed strong compliance in October that reached 101 percent, cutting oil production by 7.7 million bpd.This bodes well for January when the group must decides on its strategy for the new year.
The producers have all demonstrated great flexibility in responding to the situation at hand, and that dexterity is likely to continue.