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China Caixin manufacturing PMI Climbs to 51.9 in December

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  • China Caixin manufacturing PMI Climbs to 51.9 in December

The China Caixin manufacturing Purchasing Managers’ Index (PMI) climbed in December, marking its fastest rate of improvement in three years, figures released Tuesday showed.

In December, the Caixin PMI reading came in at 51.9, up from November’s 50.9. A reading above 50 indicates expansion, while a reading below signals contraction.

That compared with China’s official manufacturing PMI, released Sunday, coming in at 51.4, down slightly from November’s 51.7.

The official non-manufacturing PMI, which takes a reading on the services sector, came in at 54.5 in December, down from November’s 54.7.

The official figures tend to focus on larger companies, while the private Caixin data focus on smaller and medium-sized firms.

The data likely indicated that the mainland economy, which had been expected to slow, was stabilizing.

“A further rise in production at Chinese manufacturers supported the higher PMI reading in December. Notably, the rate of output growth accelerated to a 71-month high, with a number of panelists commenting on stronger underlying demand and new client wins,” the Caixin data statement said.

“Data indicated that improved domestic demand was the key driver of new business growth, however, as new export sales were unchanged in December.”

While the manufacturing PMI data tends to be more closely watched, China’s pivot toward domestic consumption and away from manufacturing- and investment-led growth means the service sector, which includes consumer industries such as real estate, retail and leisure, has become the majority of the mainland economy. It is also a key barometer of consumption, accounting for more than 50 percent of gross domestic product (GDP).

Concerns have persisted over the mainland economy’s health, as private-sector debt has surged even as the amount of growth from additional debt has declined.

But the economy in recent months has received a fillip from a pickup in the property sector.

The surprise win by U.S. President-elect Donald Trump has also been a concern for the mainland’s export-oriented economy.

On the campaign trail, Trump repeatedly accused China of manipulating its currency in order to give its exports an advantage over U.S.-made goods, and he threatened to slap a tariff of up to 45 percent on Chinese imports.

On Tuesday, he upped the ante on anti-China rhetoric, saying via Twitter that “China has been taking out massive amounts of money & wealth from the U.S. in totally one-sided trade, but won’t help with North Korea. Nice.”

But the latest Caixin data showed that the new export orders index was at the neutral 50.0 level, with 90 percent of the survey’s respondents saying there was no change in new business from overseas.

“A number of panelists commented on relatively muted foreign demand in the latest survey period,” the survey statement said.

But it wasn’t clear how sustainable the manufacturing pickup might be.

Dr. Zhengsheng Zhong, director of macroeconomic analysis at research firm CEBM, said in the Caixin statement that the mainland’s manufacturing economy continued to improve, but he added, “it is still to be seen if the stabilization of the economy is consolidated due to uncertainties in whether restocking and consumer price rises can be sustainable.”

Other economists were also doubtful of the sustainability of the pick up.

Andy Xie, an independent economist and former managing director at Morgan Stanley, told CNBC’s “Squawk Box” on Tuesday that he wasn’t optimistic the bump up could be sustained.

“Industrial production has been on an upswing for about six months or so, mainly because of the surge in property sales last year. Property developers and local governments got money and they’ve been spending the money,” he said, noting that for the past several years, every economic cycle has been driven by the property market.

“It usually doesn’t last very long,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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