Oil prices muted after mixed Chinese data, OPEC meeting awaited
By Ambar Warrick
Investing.com-- Oil prices moved little on Friday as Chinese business activity data offered mixed economic cues on the world’s largest crude importer, while markets also awaited fresh direction from an OPEC meeting next week.
Chinese purchasing managers’ index (PMI) data showed that manufacturing activity slowed in March from the prior month, albeit at a smaller-than-expected pace, while non-manufacturing activity grew at its fastest pace in 12 years. Still, weakness in factory activity- which acts as a bellwether for the Chinese economy- raised some concerns over commodity demand in the country.
Chinese factories are grappling with a pronounced slowdown in offshore export demand, amid deteriorating global economic conditions.
Overall business activity in China rose at its fastest pace in 15 years, indicating that a post-COVID economic recovery was still on track, albeit at an uneven pace. While oil bulls are betting on a Chinese recovery to drive crude demand to record highs this year, recent data suggests that such a scenario may take longer to play out than initially expected.
Brent oil futures fell 0.1% to $78.56 a barrel, while West Texas Intermediate crude futures were flat at $74.41 a barrel by 22:40 ET (02:40 GMT). Both contracts were up sharply this week, between 4% and 8%, as they bounced back from a 15-month low hit earlier.
Signs of tightening supply also aided crude prices this week, as legal disputes saw crude exports from Iraqi Kurdistan halted, while U.S. inventories fell sharply amid signs of a pickup in refiner demand.
Focus is now on a meeting of the Joint Ministerial Monitoring Committee of the Organization of Petroleum Exporting Countries (OPEC) on Monday, for any more cues on future production cuts. While OPEC ministers had vowed to stabilize markets after oil prices crashed earlier this month, recent media reports suggested that the cartel intends to keep production steady.
Crude prices were set to lose between 4% and 5% in the first quarter of 2023, as fears of slowing economic growth and a potential banking crisis severely dented the prospect of demand remaining steady this year.
The collapse of several U.S. banks drummed up concerns over an imminent recession, as did weak economic indicators from across the globe.
While intervention by regulators stemmed fears of a bigger crisis, markets still remained wary of any economic scars left over from the banking collapse.
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