After a positive opening at the beginning of the new week, crude oil reversed course and headed towards recording losses for both crude oils.
West Texas Intermediate (WTI) crude oil fell by about 0.1% at approximately 7:30 a.m. GMT, while Brent crude fell by about 0.03%.
The weak performance of oil came at the beginning of the week after the slightly weaker than expected growth in services activities in China, in addition to what appears to be a calming of fears about the escalation of military actions in the Middle East.
The S&P Global services Purchasing Managers’ Index (PMI) for January recorded a reading of 52.7 points, which represents a break in the series of accelerated growth extending over the previous four months, which was slightly lower than expected at 53 points.
The slowdown in services growth came with a noticeable decline in the growth of new orders, as well as a decline in optimism about growth to the lowest level in three months. While employment continued to grow for the second month in a row, inflationary pressures also subsided, with input prices rising at the second slowest pace in 19 months.
However, I think today’s data suggests that the services sector in China is still cohesive to some extent and maintaining growth despite the difficult demand conditions.
On the other hand, there is an increase in concerns about the future growth of the global economy, with the possibility of the Federal Reserve keeping interest rates at their high levels for a longer period than expected, especially after the very strong labor market figures for January.
It also seems that the markets have become more reassured about what is happening in the Middle East, as the United States has proven once again that it fears the conflict expanding and getting out of control in the decisive election year. This was after the US media itself said that the recent strikes that came in retaliation for the lives of its three soldiers were deliberately very limited and were not aimed at achieving the declared goals.
The absence of sufficiently positive data from China and the United States’ fear of an expansion of the ongoing wars that may threaten the interests of the current administration may put more pressure on oil markets.