Oil prices ended up slightly on Tuesday, supported by the continued weakening of the dollar and indicators of good performance in manufacturing activity in China and the United States.
In London, a barrel of Brent North Sea for November delivery appreciated 30 cents, or 0.7%, to end at $ 45.58. In New York, WTI’s US barrel for October rose 15 cents, or 0.4%, to close at $ 42.76. “The weakness of the dollar (at its lowest since April 2018, compared to a basket of currencies) and the production discipline spread by OPEC +, with more and more members of the alliance reducing their exports, support prices”, commented Eugen Weinberg, analyst for Commerzbank.
The Organization of the Petroleum Exporting Countries and its allies have agreed to severely limit production to stem the price collapse observed in March. If these constraints were relaxed this summer, members of Opec + are expected to reduce their production by 7.7 million barrels per day until January.
Increase in manufacturing activity
Regarding the dollar, as oil is denominated in the greenback, a decline in the dollar makes black gold less expensive for buyers using other currencies, which fuels demand and supports prices. Oil prices were also supported on Tuesday by data “Quite encouraging for manufacturing activity in China”, said Robbie Fraser of Schneider Electric. According to an independent index published on Tuesday, manufacturing activity rose in August for the second month in a row in the country, to its highest level for more than nine years. This “Reinforces the idea that East Asia is returning a little more to pre-pandemic demand levels, which is essential for the recovery of black gold prices”, noted Rbbie Fraser.
Another signal of the same nature: in the United States, the world’s largest consumer of crude, activity in the manufacturing sector also continued to recover in August for the fourth consecutive month. Market players are now awaiting the publication on Wednesday of the weekly report on the levels of petroleum products in the United States. It should partly reflect the disturbances caused by the passage of hurricanes Marco and then Laura in the Gulf of Mexico. These bad weather did not do the damage initially feared.
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