WTI oscillates around $80.50 as focus shifts to Caixin Manufacturing PMI and OPEC+ meet
- Oil prices juggle around $80.50 as investors await Caixin Manufacturing PMI and OPEC+ meet for fresh cues.
- The oil cartel is expected to extend production cuts to offset the broader decline in oil prices.
- A third consecutive drawdown in US EIA’s oil inventories has strengthened black gold.
West Texas Intermediate (WTI), futures on NYMEX, have turned sideways around $80.50 in the early Asian session after dropping from a fresh weekly high at $81.37. The oil prices are displaying back-and-forth moves as investors are awaiting the release of the Caixin Manufacturing PMI data and the outcome of the OPEC+ meeting, scheduled for December 4.
The black gold witnessed a significant jump on Wednesday after the United States Energy Information Administration (EIA) reported a sheer plunge in oil inventories for the week ending November 25. The EIA showed a decline in oil stockpiles by 12.58 million barrels. This is the third consecutive decline in oil stockpiles shown by the official oil inventory report.
Apart from that, expectations of a less-hawkish commentary from the Federal Reserve (Fed) chair Jerome Powell on interest rate guidance also supported the oil price rally. The oil demand is expected to gain strength as a slower rate hike pace by the Fed won’t dent the oil requirements to a greater extent.
On the supply side, headlines from Russia that the nation won’t provide oil under price cap in any case, cited by the country’s Deputy Prime Minister Alexander Novak, have bolstered the case of supply worries. Adding to that, growing fears of extension in supply cuts by OPEC+ in its meeting beyond the continuation of the two million barrels supply cut per day announced earlier is fueling an adrenaline rush into the oil bulls. A sheer supply cut from OPEC+ and Russia would make the oil market vulnerable.
Going forward, investors will keep an eye on Caixin Manufacturing PMI data. China’s official manufacturing PMI is seen lower at 48.9 vs. the prior release of 49.2. It is worth noting that China is the leading importer of oil and a slowdown in manufacturing activities in China could have a significant impact on oil prices.