All for Oil today

The OPEC oil cartel led by Saudi Arabia and allied producers including Russia are trying to agree on cuts to the amount of crude they send to the world

By Ahmed Azzam | @3zzamous | 30 November 2023

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Morning
  • China faces economic challenges as its PMI drops below 50

  • WTI crude holds at $78 amid anticipation of OPEC+ meeting outcomes

China's manufacturing alarm

China, the global economic powerhouse, is facing a mounting economic challenge as its Purchasing Managers' Index (PMI) data sounds a resonant warning. The latest figures indicate a persistent decline in manufacturing activity, prompting a renewed call for robust policy measures to support the economy.

In a surprising turn of events, China's Manufacturing PMI dipped to 49.4, extending its fall below the critical 50-threshold that demarcates expansion from contraction. Concurrently, the non-manufacturing index also displayed unexpected weakness, dropping to 50.2 from its previous reading of 50.6. These figures underscore the hurdles faced by the Chinese economy, demanding swift and strategic intervention.

Oil markets remain steady amidst OPEC+ meeting speculation

On Thursday, WTI crude futures demonstrated resilience, maintaining stability at around $78 per barrel. Investors are on high alert as they anticipate the outcomes of an imminent OPEC+ meeting. This cautious stance is influenced by a confluence of factors, including weaker-than-expected Chinese manufacturing data and recent fluctuations in oil prices.

Over the past two sessions, oil prices experienced a 4% surge, driven by reports suggesting that OPEC+ is contemplating additional oil production cuts of up to 1 million barrels per day. Saudi Arabia, a key player in the OPEC+ alliance, has been actively advocating for production cuts among its counterparts to stabilize global markets. However, as of now, no concrete resolution or deal has been reached.

Originally scheduled for November 26, the OPEC+ meeting was deferred to November 30 due to a disagreement involving African producers Nigeria and Angola over output quotas. The deadlock persists, injecting uncertainty into the global oil market. Concurrently, Chinese manufacturing, contracting for the second consecutive month in November, has further clouded the demand outlook in the world's leading crude importer.

Adding to the complexity, official data from the United States revealed an unexpected increase in crude inventories last week, signaling weak demand in the world's largest oil consumer.

As the OPEC+ talks remain deadlocked, investors are cautiously optimistic about a potential resolution, particularly with regards to holdouts Angola and Nigeria. The expectation is that consensus will be reached before the main policy-setting session for 2024. The stakes are high, and the global energy landscape is intricately tied to the decisions made within the OPEC+ alliance, making every twist and turn in the negotiations a matter of paramount significance for economies around the world.

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