Crude oil prices edged up 0.4% and 0.26% today with West Texas Intermediate (WTI) and Brent crude oil respectively after consecutive declines caused them to close at their lowest levels in more than two months.
A fourth straight month of growth in private sector activity in the euro zone helped oil as it sought to cut losses, while a flash PMI report showed the region's economic recovery was gaining further momentum and business confidence was rising, hitting its highest level in 27 months.
Growth in services activity led to an expansion in private sector business in May, while manufacturing activity continued to contract, which ultimately led to limited growth in new orders due to weak demand in international markets, the ministry said. S&P Global/HCOB.
Despite the uneven performance of activity across the region, high confidence in business routes, which has risen to its highest level since February 2022, could be a positive factor for the future of economic growth. This, in turn, will be reflected through an increase in oil demand. .
Among the region's major economies, Germany recorded a faster-than-expected growth in services activity, reflecting increased demand and high confidence in the future despite the continued contraction in factory activity two years ago. This encouraged general growth in business activities. As a result, Germany recorded a record high for all new business flows for the first time in a year.
In France, private sector activity recorded another contraction in May after continued growth in the first quarter. However, the report said this contraction was slight, with private sector demand recovering, albeit slightly, for the first time in more than a year. Confidence in the future of business has also fallen to its lowest level in four months, but remains relatively high given companies' desire to expand as demand from customers grows, the report said.
This expected growth in the Eurozone economy will not only be reflected by an increase in oil demand within the region, but will also extend to a boost in China's oil consumption, as the European Union is its most important trading partner. Dew. This takes into account weak domestic demand for the world's largest factory, and a better performing economy for its commercial partners means more oil demand and growth by China. Meanwhile, the market is closely monitoring developments in oil demand from China, as it is an important factor in crude oil prices.
Oil markets were also weighed down yesterday by the significant build-up of crude oil inventories in the US last week.Additionally, the minutes of the Federal Open Market Committee meeting once again highlighted monetary policymakers' concerns about not being able to meet their inflation target and their tendency to keep current interest rates high for longer.
Despite renewed talk of tightening monetary policy, market expectations for future Federal Reserve actions have not changed, with the market still favoring a 50% and 47% chance of a 25 basis point rate cut in September and November, respectively, according to the CME FedWatch tool.
Additionally, the geopolitical risk premium that oil prices gained from the outbreak of conflict in the Middle East appears to have evaporated, and despite the rollercoaster of the past few days, developments in the Middle East are less critical to energy markets. As fears of a major regional war continuing to ebb, oil prices continue to lose their premium.
