Peter Nurse   

Investing.com — Oil prices traded higher Monday on signs of strong demand even as China released fuel reserves and ahead of this week’s meeting of top producers to discuss supply.

Futures rose 1.4% to $84.75 per barrel by 8:30 ET (1330 GMT) and futures rose 1.4% to $84.91 per barrel at 8:49 AM ET. 

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Due to post-pandemic rebound around the globe, oil prices reached multi-year highs. The trend continued Monday when data revealed that India’s diesel consumption surpassed pre-Covid levels. This was India’s third biggest energy user. This can be attributed to the increased industrial activity before the festival season.

Analysts at Goldman Sachs (NYSE) stated that they have estimated that the oil demand will be close to 100 million barrels per day. Winter seasonality, and the rebound in international jet demand are expected to drive demand up to new heights in early next year.

This helped reverse negative sentiments caused by the rare Chinese government statement that confirmed it had allocated gasoline and diesel reserves for market expansion and stability.

Attention now turns to Thursday’s meeting of the Organization of the Petroleum Exporting Countries and their allies including Russia, a group called OPEC+, to discuss future supply levels.

The top producers can be expected to keep their December supply plan of 400,000 barrels/day, even though they face increasing competition from the consuming nations to raise output and reduce prices.

Joe Biden, the U.S. President on Saturday, urged G20 countries that produce energy to expand their production for a better global recovery.

“Other than the potential for the market returning to surplus next year, the other factor holding back the group is the uncertainty over if and when Iranian supply could return to the market,” said analysts at ING, in a note. “Iran nuclear talks are set to resume this month and the group would not want to increase output if there is the potential for higher Iranian flows.”

Monday’s optimistic tone was heightened by the fact that leaders of 20 of 20 countries failed to make any concrete actions over the weekend in order to curb global warming. This made it hard for United Nations COP26 to conclude meaningfully.