Key Points
- Oil prices rose due to China’s stronger factory activity.
- Middle East tensions, especially Israel’s strikes, pushed oil higher.
- OPEC+ output cuts could delay the rise in global supply.
Strong factory activity in China, the world’s second-largest oil consumer, and increased Middle East tensions following Israel’s resumption of attacks on Lebanon in defiance of a ceasefire agreement helped drive up oil prices on Monday.
Oil prices climb as China’s manufacturing activity boosts demand
By 7 a.m. GMT, U.S. West Texas Intermediate (WTI) crude was up 58 cents, or 0.85%, at $68.58 a barrel, while Brent crude futures had increased 57 cents, or 0.79%, to $72.41 a barrel.
According to Yeap Jun Rong, market strategist at IG, “oil prices have managed to stabilise into the new week, with continued expansion in China’s manufacturing activities reflecting some degree of policy success from recent stimulus efforts.” He noted that this gave some little comfort that the Chinese market for oil would remain stable for the time being.
China’s manufacturing activity grew at the quickest rate in five months in November, according to a private-sector poll, which increased confidence among Chinese businesses. This might further affect international markets as U.S. President-elect Donald Trump has escalated his trade threats. The global economic outlook is still clouded by the uncertainties surrounding U.S.-China trade relations, even if China’s economic recovery seems to be picking up steam.
According to Yeap, traders are also keeping a careful eye on events in Syria because of fear that they may spark wider conflicts in the Middle East. Israel and Lebanon established a ceasefire on Wednesday, but both sides accused one another of breaking the agreement.
Traders eye OPEC+ decisions as output cuts loom
According to sources who spoke to Reuters, OPEC+ decided to postpone its January oil output boost and moved its meeting to December 5. Policy for the first several months of 2025 will be established at this week’s meeting.
According to Reuters, any postponement of output increases would give OPEC+ more time to evaluate the effects of U.S. tariffs and China’s response to the ongoing trade tensions, according to Tony Sycamore, market analyst at IG in Sydney.
A monthly oil price survey by Reuters projects that Brent will average $74.53 per barrel in 2025, with the projection being influenced by global supply levels and China’s economic decline.
