December 2, 2024 (Globalinvestorideas.com Newswire) Globalinvestorideas.com, a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.com.
Crude oil prices are up about 0.6% today across both major benchmarks Brent and WTI after a negative performance last week.
Oil price gains come after positive Chinese manufacturing data helped ease concerns about the Chinese economy amid the expected escalation of the trade war with the United States.
We saw faster-than-expected manufacturing expansion in November. The Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 51.5, compared to expectations of 50.6. This came as new orders grew at the fastest pace since February 2023, along with the highest levels of confidence in the sector since March, according to the report. Export growth contributed to the growth in new orders.
However, today’s numbers carry some signs of concern about the future with Donald Trump returning to the White House next year. Export growth could be driven by stockpiling ahead of Trump’s massive tariffs on China, economists told The Wall Street Journal.
This trend should continue into the new year, which could provide further support for oil prices to overcome the deep downward trend.
Also supporting this trend is talk that Trump’s trade threats are intended to negotiate more favorable trade terms for the United States, and that the massive tariffs may not actually be implemented. Also, the government support packages are supposed to crystallize in the expansion of economic activity in China in the coming months, which could also be reflected positively in crude prices – but this optimism is still weak and is reflected in low oil prices.
Oil prices could also be supported by the rapidly escalating conflict in the Middle East. The ceasefire in Lebanon last week was nothing more than a starting point for a further escalation of the war, and the agreement appears very fragile with repeated violations of the cessation of hostilities.
This geographic and temporal extension of the Middle East conflict is likely to keep concerns about targeting oil facilities and pipelines high, which could provide support to prices again.
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