(London) Oil prices hesitated on Friday, caught between disappointing economic data in China which could weigh on demand, and the expected renewal of OPEC+ production cuts.
Around 5:50 a.m., the price of a barrel of Brent from the North Sea, for delivery in July, which is the last day of use as a reference contract, fell 0.40% to 81.53 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, rose 0.08% to $77.97.
“The combination of a stronger US dollar and poor data from China weighed on sentiment” in the oil market, comments James Harte of TickMill.
Manufacturing activity in China, a reflection of the health of factories and the industrial world, actually contracted in May, according to official figures published Friday which reflect a fragile and uneven recovery in the world’s second largest economy.
The much-hoped-for economic recovery in the country emerging from the COVID-19 pandemic at the end of 2022 was brief and less robust than expected.
Investors await the PCE index for April in the United States on Friday, the Federal Reserve’s (Fed) preferred gauge of inflation.
Higher-than-expected inflation could “further shake the confidence” of oil investors in the resilience of the American economy and its level of demand, underlines John Evans, analyst at PVM Energy.
At the same time, the eyes of the market are focused on the OPEC+ oil-producing countries who meet by videoconference on Sunday.
Representatives of the 12 members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies in the OPEC+ agreement led by Moscow, must decide on Sunday their production levels for the months to come.
“Since the meeting will only take place online, most market participants assume that the voluntary production cuts will be extended for at least three months,” summarizes Barbara Lambrecht, analyst at Commerzbank.