Onome Amuge
Oil traded higher on Monday, driven by encouraging economic data from China, the world’s top importer of crude oil, and a keen eye on the upcoming OPEC+ meeting for supply cues.
Bargain hunting also gave a boost to crude, after last week’s steep decline brought on by signs of a de-escalation of tensions in the Middle East. But the ceasefire between Israel and Hezbollah appeared to be fraying as both sides accused each other of violating the truce agreement, stirring up uncertainty in the oil market.
Adding to the mix of factors was an elevated risk premium, triggered by worsening tensions between Russia and Ukraine, which continued to underpin oil prices.
The February Brent oil futures contract climbed 1.3 percent to $72.80 a barrel, while West Texas Intermediate (WTI) crude futures gained 1.5 percent to $69.05 a barrel.
In another sign of economic resilience, China, the world’s largest oil importer, revealed a robust rebound in manufacturing activity in November.
Both the government and private sector’s Purchasing Managers’ Index (PMI) figures reflected this trend, underpinned by Beijing’s aggressive stimulus measures that have been in place since late-September.
The encouraging data from China stirred hopes of a strengthening recovery in the country’s economic activity, particularly with China’s government steadfast in its commitment to providing support. The focus in December is now on two key political meetings in China, which investors are closely monitoring for additional clues on Beijing’s stimulus policies.
However, optimism over China’s economic outlook was tempered by tariff threats from U.S. President-elect Donald Trump, which exacerbated fears of renewed trade tensions between the two economic powerhouses.
This week, all eyes are on the much-anticipated meeting of the Organization of Petroleum Exporting Countries and its allies, (OPEC+). Originally scheduled for last Sunday, the meeting was pushed back by four days and is now set to take place this Thursday.
With oil prices remaining on the lower end of the spectrum and concerns over a tepid demand outlook for the coming year looming large, the cartel is widely expected to extend its current production cuts.
