Oil prices rose on Monday as robust Chinese factory activity provided optimism for demand from the top importer.
At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $68.62 per barrel, up 0.9%.
Brent crude on the Intercontinental Exchange was $72.47 per barrel, up 0.9% from the previous close.
Robust manufacturing in China
A private-sector survey showed China’s manufacturing expanded at its fastest pace in five months during November.
“Oil prices have managed to stabilize into the new week, with the continued expansion in China’s manufacturing activities reflecting some degree of policy success from recent stimulus efforts,” Yeap Jun Rong, market strategist at IG, told Reuters.
China’s economic struggles have translated into poor oil demand from the country so far this year. This has weighed on global consumption as well.
However, the robust economic data from the country could indicate that crude demand may be holding for now.
Geopolitical tensions
The oil market will monitor developments in Syria closely.
Russian and Syrian jets have carried out a series of air strikes on Syrian rebels led by the jihadi group Hayat Tahrir al-Sham, who took over most of Aleppo in a shock offensive on Saturday and entered the city of Hama.
Syrian President Bashar Al Assad reportedly vowed to crush insurgents who had swept into the city of Aleppo.
Oil markets were cautious as they weighed whether tensions in Syria could widen into a bigger conflict in the Middle East.
Meanwhile, a truce between Israel and Lebanon-based Hezbollah came into effect last week. However, both sides have accused each other of ceasefire violations.
The situation remained tense in the region as the Middle East sits on more than half of the world’s oil reserves.
Last week, oil prices had slipped more than 3% after a ceasefire agreement was brokered by the US between Israel and Hezbollah. Falling risk to oil supply weighed on sentiments.
Additionally, concerns about an oversupply in the market also dragged down prices.
All eyes on OPEC+ meeting
The Organization of the Petroleum Exporting Countries and allies are scheduled to hold a ministerial-level meeting on Thursday. The meeting was originally scheduled for Sunday.
Uncertainties remain surrounding the meeting as traders speculated about the reasons for such a delay.
However, experts believe that oil prices are expected to trade in a narrow range ahead of the OPEC+ meeting.
Analysts at ING Group said in a note:
A handful of OPEC+ members are set to gradually bring 2.2m b/d of supply back onto the market next year. However, the oil balance does not need this additional supply as it will push the market into a large surplus.
“The challenge is that the group needs to find a balance between trying to support the market and limiting its loss in market share. Complicating matters still further, some members are still failing to stick to their agreed production levels,” ING analysts added.
The International Energy Agency expects a significant supply overhang next year in the oil market even without OPEC’s planned production increase from January.
Crude technical forecast
“Geopolitical instability and shifting production strategies continue to shape energy markets, emphasizing a volatile yet pivotal period ahead,” Arslan Ali, derivatives analyst at FXempire.com said in a note.
Immediate resistance for WTI crude prices are seen at $68.95 and $69.34, according to Ali.
According to Reliance Securities, the WTI January contract is currently trading above the pivot point of $68.57 per barrel.
The brokerage sees support for the contract at $67.45, followed by $$66.75.
As for Brent, support is seen at $71.75 per barrel, while resistance at $72.91, followed by $73.31, according to FXempire’s Ali.
The post Oil prices rise on China demand optimism as markets eye upcoming OPEC meeting appeared first on Invezz