Oil prices react to strong US and Chinese economic data

Brent’s price felt some upward pressure after manufacturing PMI in China exceeded expectations in November.

PHOTO: Flags of China and the US. Getty Images

China's Manufacturing Purchasing Managers' Index (PMI) reading came in at 50.3 in November, up from 50.1 in the previous month, the country’s National Bureau of Statistics (NBS) reported.

The data showed some growth in China’s factory activity, leaving room for more measures to boost economic growth in the country. “Signs of improvement in China’s economy helped boost [market] sentiment,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

In the US, manufacturing PMI increased to 48.4 in November, up from 46.5 recorded in October, the Institute for Supply Management (ISM) said.

Although manufacturing activity in the US recorded a growth in November, the PMI reading remained well below 50.

A PMI reading below 50 typically indicates weak economic health and a contraction in the manufacturing sector, which includes production, inventory levels, new orders, etc. It also highlights demand growth concerns, ultimately weighing down on prices of commodities like oil.

By Aparupa Mazumder

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