Fundamental Comment

Oil recovers from one-month low on upbeat Chinese data

Oil recovers from one month low on upbeat Chinese data

Oil prices climbed during Wednesday’s trading session, recovering slightly from the lowest levels in nearly a month recorded on Tuesday, as the improvement in Chinese services data eased fears of global slowdown.

As of 09:16 GMT, Brent crude oil futures rose 0.53 percent at $58.58 a barrel, while the session's highest level was recorded at $58.62 a barrel.

West Texas index was 0.67 percent up at $54.30 a barrel, after it hit a top at $54.39 per barrel. 

Global markets rose today after a private survey showed that private sector activity in China grew at a three-month pace in August after new orders surged, spurring the biggest increase in employment in more than a year. 

Given the fact that China considered the world's second largest oil consumer and largest importer, fears of global slowdown eased and therefore giving some room to crude prices to rebound after three straight sessions of decline.

On the other hand, the U.S. President Donald Trump warned yesterday that he would be "tougher" on Beijing in a second term if trade talks between the American and the Chinese sides continued, reigniting market fears that U.S.-China trade escalations could cause a U.S. recession. 

Oil prices fell to a near-month low on Tuesday after data showed U.S factory activity contracted in August for the first time in three years and the eurozone manufacturing sector contracted for the seventh month in August. 

Later in the day, investors will await the release preliminary U.S. inventories data, where the U.S. Energy Information Administration will release official figures on Thursday. 

Russia's Energy Minister Alexander Novak said in press statements that his country will fully abide by the OPEC agreement to reduce the world oil supply this month, adding that Russia's crude oil production was about 143,000 barrels per day lower than October 2018 levels. 

The dollar index extended its drop to 98.52, resuming its fall from May 2017 peak of 99.31 recorded the previous session.

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