Tuesday Sep 3 2024 07:44
4 min
Oil prices are holding steady after falling 1.7% in the previous week, the third straight weekly decline.
Oil prices are holding steady after falling 1.7% in the previous week, the third straight weekly decline.
Oil prices remained under pressure on Monday amid expectations of higher OPEC production starting next month and signs of weak Chinese demand.
The OPEC group is set to proceed with planned increases in oil output starting next month. According to sources, 8 OPEC+ members are expected to increase production by 180,000 barrels per day in October as they start to unwind the supply cuts of 2.2 million barrels per day.
OPEC+ is set to proceed with a planned oil output hike from October, as Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand.
Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day in October, as part of a plan to begin unwinding their most recent layer of output cuts of 2.2 million bpd while keeping other cuts in place until end-2025.
There are concerns that an increase in production could negatively impact the delicate demand-supply equation, pulling prices lower.
Furthermore, this increase in oil production could also come at a period when the global economy is showing signs of slowing and China’s demand outlook deteriorates.
Data over the weekend showed that Chinese manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled to fill orders. That said, the Caixin manufacturing PMI came in slightly better than expected, returning to growth, albeit weakly at 50.6.
dropped and manufacturers faced a shortage of orders, according to an official survey released on Saturday. This downturn is likely to pressure policymakers to increase stimulus measures aimed at supporting households.
The National Bureau of Statistics' purchasing managers' index (PMI) decreased to 49.1 in August, down from 49.4 in July. This marks the index's sixth consecutive decline and its fourth month below the 50 threshold that separates expansion from contraction.
Meanwhile, recent EIA data showed that consumption in June fell to a seasonal low last recorded during the pandemic.
Looking ahead today, volumes could be below owing to the US Labour Day holiday. Attention will be on inventory data later this week for clues over demand in the US and US manufacturing PMI and non-farm payroll data.
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