Brent Crude Oil Slips On Disappointing Chinese Manufacturing Data, All Eyes On OPEC Meeting
Key Takeaways:
- Brent Crude futures prices fell below $82.60 per barrel on Thursday, weighed by weak Chinese Manufacturing PMI data
- Weaker-than-expected Chinese Manufacturing data indicates weak demand from the world's top oil importer
- Markets cautiously await the upcoming OPEC meeting for fresh oil-directional impetus; further output cuts are expected to be announced
Brent Crude Oil prices slipped in the early hours of the Asian trading session on Thursday, weighed by weaker-than-expected Chinese Manufacturing data as investors cautiously wait for the upcoming OPEC meeting, in which further supply cuts are expected to be announced.
As of press time, Brent crude futures fell 25 cents (0.03%) to trade at $82.58 per barrel and is on track to post one of its best weekly gains in more than two months after finding support earlier this week from supply disruptions in Kazakhstan and Russia and from a generally weaker U.S. dollar weighed by firm market bets that the Fed is done with its rate-hiking cycle.
A Chinese National Bureau of Statistics report released earlier today pointed to a second straight month of decline in manufacturing activity in China, highlighting that more support measures from the government would be needed to help shore up economic growth in the world's largest oil importer. The official Manufacturing PMI in China inched down to 49.4 in November 2023 from 49.5 in October, below market forecasts of 49.7.
Further contributing to the sentiment around the Brent futures crude oil was the U.S. Energy Information Administration report released on Wednesday, which showed Crude oil inventories in the U.S. rose by 1.609 million barrels in the week ending November 24, 2023, following an 8.701 million build in the previous period, and compared with market forecasts of a 0.933 million decrease, indicating weak demand.
Moreover, the modest rebound in U.S. dollar demand is another factor that helped limit further gains around the precious black liquid. This comes on the backdrop of the impressive US GDP growth data for the third quarter, which was revised higher: From 4.9% to 5.2%, above the consensus expectation of 5.0% and more than twice Q2's 2.1%. Regarding the components, the upward revision reflected more substantial business investment and state/local government spending.
As we advance, Oil traders look forward to the outcome of the OPEC meeting later today, in which the cartel is expected to announce fresh supply cuts, which remains supportive of rising crude oil prices and suggests the current downtick runs chances of fizzling out sooner or later. Saudi Arabia and Russia are expected to lead the intergovernmental organization in further trimming production, given that the two countries have reduced supplies by 1.3 million barrels of oil per day so far this year. Media reports on Wednesday suggested that the cartel will cut production by an additional 1 million barrels per day to bring the total output cuts to more than 3 million barrels per day (bpd).
