Home Business News Oil continues to decline today even with slightly better-than-expected data from China

Oil continues to decline today even with slightly better-than-expected data from China

2nd Sep 24 11:57 am

Crude oil is down 0.4% for both major benchmarks, Brent and WTI, reaching more lows in more than a decade.

The continued decline in oil prices comes despite better-than-expected performance from manufacturing activity in China with positive signs from the sector.

Manufacturing activity returned to growth again, with a reading of 50.4 for the Caixin/S&P Global Manufacturing PMI for August.

The report also spoke of manufacturing production expanding for the tenth consecutive month in addition to the return of growth to new orders in light of improving demand conditions, but in contrast to a decline in export orders for the first time this year. Meanwhile, sentiment rose to a three-month high driven by improving economic conditions and business developments.

It also comes with the absence of a near horizon for settling the conflict in the Middle East, which is likely to expand further and disrupt the flow of global energy supplies, especially after what we witnessed from the attack on an oil tanker early last week. While reaching a ceasefire agreement in Gaza, which in turn could stop the escalating regional escalation, does not seem imminent either.

National Security Advisor Jake Sullivan have told the families of US hostages in Gaza that President Joe Biden will present a final proposal for a ceasefire this week, according to sources reported to Axios. A senior official told The Washington Post that the United States is talking with Egypt and Qatar about proposing a final “take it or leave it” agreement in the coming weeks, which if it fails, could be the end of the American-led negotiations.

This comes after the confirmation of the death of six hostages in Gaza, which prompted a labor strike in Israel to put more pressure on Benjamin Netanyahu’s government to reach an agreement. I do not believe that the current internal and even US pressures will be sufficient to push towards an agreement, especially with Netanyahu’s insistence on the southern border corridors, which Hamas absolutely rejects.

The absence of a solution to the conflict in the near future will keep the door open for escalation on multiple fronts. Since the start of the last round of negotiations, we have witnessed an unprecedented escalation in the West Bank, the Lebanese-Israeli front, and the Red Sea.

Returning to the economic side, the focus this week also shifts to a series of labor market data in the US, most notably from Friday with the non-farm payrolls (NFP) data for last August. While the previous shocking reading of non-farm payrolls had renewed concerns about the health of the US labor market and economy and revived talk of recession again, which in turn contributed to a sharp decline in oil prices.

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