Oil recovers from an early dip, but China and the global economy cast a shadow over the future
Oil prices held in a narrow range on Tuesday, though the outlook for demand was clouded by a weak manufacturing activity survey from China, and a warning from the head of the International Monetary Fund that the global economy faced a tough year ahead.
Brent crude futures recovered from their early weakness, when prices fell by $1 a barrel, rebounding to $86.29 a barrel by 0737 GMT, an increase of 38 cents, or 0.44%. U.S. West Texas Intermediate crude was at $80.77 a barrel, up by 51 cents, or 0.64%.
“This is likely (to be a) volatility play,” said head of APAC analysis at Vortex Serena Huang.
Vandana Hari, founder of Vanda Insights in Singapore, said little had changed during the last weeks of December.
“But there are a few factors in flux, major among them being the economy and China’s COVID exit, and factoring that in isn’t easy,” she added.
The weak factory survey from China, the world’s largest crude importer and second-largest oil consumer, was a bearish factor. The Caixin/Markit manufacturing purchasing managers’ index fell to 49.0 in December from 49.4 in November. The index has stayed below the 50-point mark that separates growth from contraction for five straight months.
Oil prices had settled more than 2% higher on Friday, with Brent and WTI ending 2022 up 10.5% and 6.7% on a year before, respectively.