Current Crude Prices Gain with Hopes of Fresh Stimulus

The current crude oil prices have moved up as China and Europe’s weak manufacturing figures raise hopes of new stimulus measures from the central bank. The crude price per barrel of Brent for October delivery gained 54 cents to reach $116.32 during midday electronic trading.

Meanwhile, the main contract in New York saw a 68-cent increase compared to its closing level in the last trading day of the past week to a crude price per barrel of $97.15.

Senior commodities strategist of Singapore’s ANZ Research, Mr. Nick Trevethan, said that traders were hoping for the weak manufacturing data of Europe and China would bring about additional stimulus soon.

The recently released figures of China show that the country’s August manufacturing activity – the biggest energy consumer in the world – has dropped for the tenth straight month to its lowest rate in over three years. This poor performance indicates that past government enacted stimulus measures were not enough and that additional policy easing was required.

In Europe, Markit research firm compiled survey data that showed that the eurozone’s manufacturing activity fell for the seventh straight month in August. The drop was sharper than initially expected. In August, the purchasing managers index was 45.1, a level that is slightly lower compared to the initial estimate of 45.3. A score lower than 50 signals a contraction.

Everyone is now closely anticipating the upcoming meeting of the European Central Bank, along with increasing expectations that President Mario Draghi could introduce a bond-buying plan to strengthen debt stricken countries like Spain and Italy.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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