Oil prices stood still on Monday, caught in headwinds between the fear of seeing the OPEC+ alliance increase its production and the satisfaction of a good Chinese indicator. The barrel of Brent from the North Sea for delivery in February, which was the first day of use as a reference contract, ended almost in balance (-0.01%), at 71.83 dollars. A barrel of American West Texas Intermediate (WTI) due in January gained 0.15%, to $68.10.
The session started in the green after the Caixin PMI showed that activity was expanding in the Chinese manufacturing sector in November, the highest since June. Duncan Wrigley of Pantheon Macroeconomics noted that “the confidence of economic circles (was) up” in the People's Republic and that purchases of raw materials by industrial companies had accelerated. “The production capacity utilization rate had not been this high for several months, it is promising” for demand, particularly for oil, estimated Stewart Glickman of CFRA. But “I’m not very enthusiastic about the prospects for Chinese or global demand”tempered the analyst, Pantheon noting that employment remained depressed, as did prices, which were falling in China.
«Frictions»
Operators were also encouraged to be cautious by the postponement from Sunday to Thursday of the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and their allies in the OPEC+ agreement. “This is not a good sign for unity” of the cartel, noted Stewart Glickman. In this context, Saudi Crown Prince Mohammed bin Salman visited the United Arab Emirates on Sunday, his first official visit to this neighbor in three years, according to the official Saudi press agency.
According to several media, on the agenda of the discussions is notably the authorization, granted in June by OPEC, to the Emirates, to increase their production by 300,000 barrels per day from January. “It’s about getting everyone back on track (…) and deciding who will be entitled to what”according to Stewart Glickman, for whom “there could be friction.” OPEC+ has already twice postponed the acceleration of its production, initially planned for October, to take into account the weakness of the black gold market, which fears a significant imbalance between supply and demand in 2025.
