September 06, 2024 [Oilprice]- Oil prices began the month of September with a drop in Asian trade, depressed by another weak reading of China’s official manufacturing activity data and signals from OPEC+ that it could proceed with unwinding some of the production cuts in October, as planned.
Early on Monday morning in Europe, oil prices were down by around 0.5%, with Brent Crude prices falling to $76.54, and the U.S. benchmark, WTI Crude, down by 0.4% to $73.24 per barrel.
Oil prices fell on reports that OPEC+ producers could start easing the ongoing cuts. Weak Chinese manufacturing also added to the downward pressure on crude prices.
Libya’s supply outage and a stronger-than-expected U.S. economy are helping to keep oil prices afloat despite this growing bearish pressure.
This weekend, the official Purchasing Managers’ Index (PMI) from the National Bureau of Statistics showed that China’s manufacturing activity contracted for a fourth consecutive month in August and slumped to the lowest reading in six months.
The PMI data from the National Bureau of Statistics was also below analyst expectations and matched last year’s lowest level. New orders, including export orders, as well as employment, remained in contraction territory in August.
“This month’s PMI data was another data point showing manufacturing strength from the first half of the year is cooling off and that we will need to see other areas of the economy pick up if the 5% GDP growth target is to be achieved,” analysts at ING said in a note on Monday.
Another weak manufacturing dataset from China weighed on the outlook of oil demand in the world’s top crude oil importer.
A private PMI assessment tracking small export companies showed on Monday modest improvement in manufacturing last month.
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), a private gauge of the manufacturing sector by Caixin Media and S&P Global, showed on Monday the purchasing managers index rising to 50.4 in August, up from 49.8 in July, signaling a slight recovery of the index into expansion territory with the reading of above 50.
Nevertheless, analysts believe that China needs more economic stimulus to turn a corner in its economy.
