The world’s second-largest consumer of crude oil, China, saw an increase in manufacturing activity on Friday morning, which helped lift confidence. At the same time, fears over Middle Eastern supply also increased. Brent futures, up almost 6% this week, were up 15 cents, or 0.19%, at $79.42 per barrel. After increasing by approximately 8% this week, West Texas Intermediate (WTI) crude for the United States increased by 17 cents, or 0.23%, to $74.54.
A Reuters poll of economists found that while China’s manufacturing activity increased in March at a slower rate than it did in February, which saw a record-breaking expansion, it still outperformed forecasts. With the lifting of restrictions connected to the coronavirus and a decline in demand globally, China’s industrial activity has recently emerged as a significant factor in pricing. Oil prices are expected to end a second consecutive week of advances after the biggest bank failure since the 2008 financial crisis alarmed traders and roiled markets.
As two banks in the U.S. and Europe were saved, concerns about a full-blown global banking crisis decreased. On Thursday, prices increased by more than 1% as a result of decreased U.S. crude stockpiles and the suspension of exports from the Kurdistan area of Iraq, which lessened the impact of a smaller-than-anticipated reduction in Russian supplies. After the stoppage of the northern export pipeline, producers have shut down or restricted output at a number of oilfields in northern Iraq’s semi-autonomous Kurdistan region.
There will soon be more outages. The U.S. Energy Information Administration said that unexpectedly, in the week leading up to March 24, U.S. crude oil stockpiles dropped to a two-year low. The markets are now anticipating Friday’s expected U.S. spending and inflation statistics and how they may affect the dollar’s value.
