Oil jumps on Chinese factory growth, hopes for deeper OPEC cuts

TOKYO, Dec 2 (Reuters) - Oil prices rose more than 1% on
Monday as signs of rising manufacturing activity in China
pointed to increasing fuel demand and hints that OPEC may deepen
output cuts at its meeting this week indicated supply may
tighten next year.
Brent crude futures LCOc1 rose 74 cents, or 1.2%, to
$61.23 a barrel by 0157 GMT. West Texas Intermediate (WTI)
futures CLc1 rose $86 or 1.6%, to $56.03 a barrel, having
risen by more than $1 earlier.
On Friday, WTI futures settled 5.1% lower amid reduced
volumes because of last week's Thanksgiving Day holiday while
Brent plunged 4.4%. Prices fell on concerns that talks to end
the trade war between the United States and China, the world's
two biggest oil users, would be disrupted by U.S. support for
protestors in Hong Kong.
But oil rose on Monday after factory activity in November in
China, the world's biggest oil importer, increased for the first
time in seven months because of rising domestic demand amid
government stimulus measures.
"At the open prices remain supported by the surprising
resilient China factory activity with the forward-looking PMI's
beating expectations," said Stephen Innes, chief Asia market
strategist at AxiTrader.
Prices were also supported after Iraq's oil minister said on
Sunday that OPEC and allied producers will consider deepening
their existing oil output cuts by about 400,000 barrels per day
(bpd) to 1.6 million bpd. The Organization of the Petroleum Exporting Countries (OPEC)
and allies including Russia, known as OPEC+, are expected to at
least extend existing output cuts to June 2020 when they meet
this week.
The OPEC+ group has coordinated output for three years to
balance the market and support prices. Their current deal to cut
supply by 1.2 million bpd that started from January expires at
the end of March 2020.
OPEC's ministers will meet in Vienna on Dec. 5 and the wider
OPEC+ group will meet on Dec. 6 to make a decision on the
current agreement.
"All eyes are on OPEC this week," Innes said.
Oil rose in November partly on expectations of the United
States and China reaching an initial deal trade deal by the end
of the year that would help restore global economic growth and
future crude demand.
Beijing's top priority in any phase one trade deal is the
removal of existing U.S. tariffs on Chinese goods, China's
Global Times newspaper reported on Sunday, a stance the U.S. is
unlikely to agree to.
The potential for no trade deal may weigh on oil prices next
year, along with new supply that could create a glut, a Reuters
poll showed on Friday. O/POLL