Weak demand signs and data from China cause oil prices to decline

30 Nov 2023 , 10:19 AM

Due to weaker-than-expected Chinese manufacturing statistics, oil prices declined in early Asian trade on Thursday. However, investors remained cautious ahead of an OPEC+ meeting where production cuts are anticipated.

U.S. West Texas Intermediate (WTI) crude futures dropped 24 cents, or 0.3%, to $77.68 a barrel, while Brent crude futures declined 28 cents, or 0.3%, to $82.90 a barrel.

An official factory survey released on Thursday revealed that, for the second consecutive month and more quickly than anticipated, manufacturing output in China shrank in November. This suggests that additional policy support measures are required to assist sustain economic development in the world’s top oil importer.

The official purchasing managers’ index (PMI) remained below the 50-point threshold separating growth from contraction in November, dropping to 49.4 from 49.5 in October. Reuters polled analysts, and they predicted a reading of 49.7.

On Wednesday, the U.S. Energy Information Administration revealed that last week’s unexpected increase in the country’s crude oil and distillate fuel supplies was indicative of low demand. The report also showed that gasoline stockpiles increased more than anticipated.

The previous session’s oil markets were buoyed by expectations of a price-supportive resolution from the Organization of Petroleum Exporting Countries (OPEC+) and its allies, including Russia.

On Thursday, OPEC+ members are scheduled to gather to discuss policies. Additional output cuts were the main topic of discussion before to the meeting, though specifics had not yet been decided, people close to the group told Reuters.

According to a different media source on Wednesday, the reduction might reach one million barrels per day.

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