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UPDATE 3-Oil climbs on positive China data, rising demand

Mon, 10th Aug 2020 04:39

* China's factory deflation slows in July

* Saudi Aramco boss bullish on Asian fuel demand recovery

* Iraq to deepen supply cuts in Aug, Sept
(Updates prices, adds analysts comment, Chinese factory data,
changes dateline to London)

By Bozorgmehr Sharafedin

LONDON, Aug 10 (Reuters) - Oil rose on Monday, supported by
an improvement in Chinese factory data and rising energy demand
as countries eased coronavirus-related lockdowns, but traders
remained cautious due to U.S.-China tensions and uncertainty
over a U.S. stimulus package.

Brent crude rose 54 cents, or 1.2%, to $44.94 a
barrel by 0852 GMT, while U.S. West Texas Intermediate (WTI)
crude was up 69 cents, or 1.7%, to $41.91 a barrel.

Saudi Arabian Aramco Chief Executive Amin Nasser
said on Sunday that he sees oil demand rebounding in Asia as
economies gradually open up.

China's factory deflation eased in July, driven by a rise in
global oil prices and as industrial activity climbed back
towards pre-coronavirus levels, adding to signs of recovery in
the world's second-largest economy.

"With oil demand still slowly grinding higher, and oil
supply in check due to the OPEC+ production cut deal and prices
too low to incentivize strong production growth in the United
States, the oil market remains undersupplied," UBS analyst
Giovanni Staunovo said.

Iraq said on Friday it would cut its oil output by a further
400,000 barrels per day in August and September to compensate
for its overproduction in the past three months. The move would
help it comply with its share of cuts by the Organization of the
Petroleum Exporting Countries and allies, known as OPEC+.

"This would send out a strong signal to the oil market on
various levels. That said, this would also require the
international companies operating in Iraq to join in with the
cuts," Commerzbank analyst Eugen Weinberg said.

However, uncertainty over U.S. fiscal stimulus put some
pressure on prices. President Trump signed a series of executive
orders to extend unemployment benefits after talks with Congress
broke down.

U.S. House Speaker Nancy Pelosi and Treasury Secretary
Steven Mnuchin said on Sunday they were open to restarting the

"The longer this drags on the worse it is for the demand
scenario," said Michael McCarthy, market strategist at CMC
Markets and Stockbroking.

Adding to the uncertainty were ongoing tensions between
Washington and Beijing. Trump signed two executive orders
banning WeChat and TikTok in 45 days' time while announcing
sanctions on 11 Chinese and Hong Kong officials.

Markets will now keep an on a China-U.S. meeting on trade
talks scheduled for this weekend.

(Reporting by Bozorgmehr Sharafedin in London, additional
reporting by Sonali Paul in Melbourne, editing by Louise

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