Oil prices increased by approximately 1% on Monday following the release of positive manufacturing data from China, the world’s largest crude importer. The data contributed to renewed optimism for fuel demand, though concerns about potential U.S. tariffs continued to create uncertainty in global markets.
As of 0206 GMT, Brent crude rose by 76 cents, or 1%, to $73.57 per barrel, while U.S. West Texas Intermediate (WTI) crude increased by 75 cents, or 1.1%, to $70.51 per barrel.
The price gains followed official data released on Saturday indicating that China’s manufacturing activity expanded at its fastest pace in three months. The increase was attributed to rising new orders and higher purchase volumes, which led to stronger production levels. Investors are monitoring China’s annual parliamentary meeting, set to begin on March 5, for potential new measures aimed at bolstering the country’s economy.
Market analyst Tony Sycamore of IG highlighted China’s National Bureau of Statistics (NBS) manufacturing Purchasing Managers’ Index (PMI) returning to expansionary territory as a factor in the price increase. However, he also noted that China’s broader economic outlook remains uncertain, particularly with the scheduled implementation of additional U.S. tariffs on Chinese exports beginning March 4.
Goldman Sachs analysts maintained a cautious optimism, stating in a note that the data suggests stable to slightly improved economic activity in China in early 2025. However, they also acknowledged that the U.S. tariff increase could lead to potential retaliatory trade measures.
Oil prices had previously declined in February, marking the first monthly drop in three months. The downturn was driven by concerns over global economic growth, exacerbated by the prospect of trade restrictions imposed by the U.S. and its trading partners.
Market sentiment showed signs of improvement following a summit on Sunday, where European leaders expressed strong support for Ukrainian President Volodymyr Zelenskiy. The leaders reaffirmed commitments to assisting Ukraine, amid ongoing geopolitical tensions. Zelenskiy also indicated his willingness to engage in further discussions with U.S. officials regarding a potential minerals trade agreement.
Meanwhile, attacks on Russian refineries have raised concerns over potential disruptions in the country’s refined product exports. Reports indicate that another refinery in the Russian city of Ufa has been affected by a fire.
Looking ahead, analysts expect oil prices to remain relatively stable in 2025, with Brent crude projected to average $74.63 per barrel, according to a Reuters poll. Analysts anticipate that any potential disruptions from new U.S. sanctions could be balanced by steady global supply levels and the possibility of diplomatic progress in the Russia-Ukraine conflict.
In related developments, the U.S. has urged Iraq to resume oil exports from the Kurdistan region. However, eight international oil companies operating in the area stated on Friday that they would not restart shipments via Turkey’s Ceyhan port due to unresolved commercial agreements and payment concerns for both past and future exports.
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