Oil Prices Dip as China’s Manufacturing Shrinks for Fifth Consecutive Month

In the wake of disconcerting news that China’s manufacturing sector has contracted for the fifth consecutive month, global oil prices saw a dip on Thursday.

Meanwhile, investors maintained a cautious stance, eagerly anticipating the release of the U.S. Personal Consumption Expenditure (PCE) report later in the day for insights into the interest rate outlook.

Brent crude oil decreased by 9 cents, or 0.1% to $85.77 per barrel while the U.S. West Texas Intermediate crude declined by 6 cents, or 0.1% to $81.57.

China’s official factory survey for August reported a continued contraction in manufacturing activity, raising concerns about the stability of the world’s second-largest economy.

The official Purchasing Managers’ Index (PMI) inched up to 49.7 from July’s 49.3 as disclosed by the National Bureau of Statistics.

However, it remained below the critical 50-point threshold that distinguishes expansion from contraction.

While a tighter U.S. oil supply outlook had bolstered prices in the previous session, these gains were offset by concerns surrounding demand, according to market strategist Yeap Jun Rong from IG.

Yeap commented, “Overall, the conflicting factors are causing some indecision in the market today, exacerbated by a wait-and-see approach as attention shifts towards the release of the U.S. Core PCE later tonight.”

Investors are closely monitoring the U.S. Personal Consumption Expenditure (PCE) release, scheduled for Thursday, as it serves as the Federal Reserve’s preferred indicator of inflation. This key economic data is expected to provide valuable insights into the trajectory of interest rates.