Oil prices up but remain subdued
LONDON, September 4, 2019 – Brent Oil Futures, traded in London, rose 0.21%, to $58.38 a barrel by 12:25AM ET (04:25 GMT), while US Crude Oil WTI Futures traded in the US gained 0.37%, to $54.14 at barrel.
A private survey showed that China’s services sector expanded at the fastest pace in three months in August. As new orders increased, hiring increased at the highest rate in a year. The data from the largest oil importer in the world helped shore up oil prices.
The slight increases on Wednesday followed a drop to close to a one-month low on Tuesday that was due to a gloomy outlook for the global economy.
On Wednesday, the Institute of Supply Management released its purchasing managers index for August, which came in at 49.1, indicating contraction. It was the first contraction in three years. Euro zone manufacturing activity in August also contracted, making it seven months of contraction in a row.
The ever-escalating U.S.-China trade war also dampened investor sentiment, with both sides implementing new tariffs over the weekend.
“Given the tumble that we saw overnight it’s probably people locking in gains on shorts or perhaps establishing new longs in anticipation we might get an announcement from Beijing on setting a date for trade talks with the (United States),” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Reuters.
Data on US inventory levels has been delayed this week due to the US Labor Day holiday on Monday, but US crude oil stockpiles likely declined for a third straight week, a preliminary Reuters poll indicated.
On the supply side, Venezuela’s oil exports fell in August to their lowest level in 2019 after sanctions from the US.
OPEC’s oil exports reached a four-month high. A Reuters survey placed the total August production estimates for OPEC at 29.61 million barrels per day (bpd). Bloomberg puts it as 29.99 million bpd.