Crude futures rose strongly in midweek as Opec and its allied producers signalled they are prepared to restrict supplies further in a bid to prop up faltering prices.

Market optimism about a potential Brexit deal between the UK and European Union also boosted sentiment.

Oil had earlier dipped below $59 per barrel amid concerns about weaker demand for fuel due to slower economic growth and forecasts of a further rise in US crude inventories.

However, encouraging signs from Opec that further supply curbs could come in December lent support.

Prices had come under pressure earlier in the week because Saudi Arabia said its oil production was recovering fast, with output expected to surpass levels seen before the devastating 14 September drone and missile attacks on its oil installations.

The US-China trade war that has cast an ominous shadow over the global economy also kept market players on tenterhooks.

International benchmark Brent fell by more than $1 per barrel on Monday following a report that China’s factory gate prices in September declined at the fastest pace in more than three years.

The International Monetary Fund warned that the US-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis. However, it said output would rebound if tariffs imposed in connection with the trade friction were removed.

Brent futures were fetching around $60 per barrel in London in the middle of this week, compared with $59 at the same time last week.

US West Texas Intermediate crude was changing hands at around $54 per barrel in New York, an increase on last week’s $53.40.

UK and EU officials resumed talks aiming to clinch a Brexit deal on Wednesday just a few hours after late-night negotiations wound up, but it was far from clear they would reach an agreement before an EU leaders’ summit on Thursday.

Analysts have said any agreement that avoids a no-deal Brexit could boost economic growth and, in turn, oil demand. Encouraging words from Opec also fuelled optimism, with its Secretary-General Mohammad Barkindo saying an option for Opec and its allies is to implement deeper cuts in oil production. Opec, Russia and other producers have a deal to curb combined oil output by 1.2 million barrels per day until March 2020. They meet on 5 and 6 December in Vienna to review the decision.

Meanwhile, Saudi Arabia said its oil production is set to recover in October and November to levels above those seen before attacks on its energy installations.

Energy minister Prince Abdulaziz bin Salman said output by the world’s largest oil exporter will reach 9.86 million bpd in October and November.

The attacks knocked out half of the kingdom’s oil production, or 5% of global output, sending oil prices soaring. But a quick recovery in production, coupled with concerns about slowing global economic growth, have reversed all those gains.

Prince Abdulaziz said Saudi production capacity would reach 12 million bpd by the end of November. At Upstream's press time, investors were awaiting the release of weekly US data on inventories from the Energy Information Administration - delayed by a public holiday.

Weekly

Crude futures respond strongly