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Oil prices climbed this week on the back of rising factory activity in China and continuing tensions in the Middle East.
Brent crude futures gained 0.47%, closing at $72.18 per barrel, while US West Texas Intermediate (WTI) rose 0.47% to $68.32.
China’s manufacturing sector bounced back with growing global demand, outpacing movements in the past five months. As the world’s second-largest oil consumer, the outlook is bright for continuing oil demands.
The expansion comes on the back of Beijing’s stimulus measures, which gained traction over the past few weeks. These figures have eased concerns among market participants over the slowing demand within the region.
Despite uncertainties around the global economy, the present data shows a strong likelihood of China’s industrial recovery further supporting oil prices in the short term.
Movements in the Middle East continue between Israel and Lebanon. Despite ceasefire agreements, continued military presence and attacks persist, with conflict in Syria adding to the tension.
Potential disruptions in the region could be cause for concern as the situation unfolds.
OPEC+ discussions continue as the group discusses plans to delay output hikes planned for January 2025. On top of military tension in the Middle East, the pause seems to be motivated primarily by uncertainties arising from Trump’s US trade policies and China’s responses to these measures.
While the market had priced in a gradual production increase, any delay could help prevent a supply glut and potentially keep oil prices supported through early 2025.
Despite the short-term bullish tone driven by Chinese demand and Middle East conflict, long-term oil price forecasts are less optimistic.
Traders will be closely watching developments in Syria and Lebanon for any signs of escalating conflict that could impact oil supply.
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