Economic activity in the Eurozone eased for the second month in a row!
Published data from Japan for August showed Japan's manufacturing sector grew at its slowest pace in 19 months. While earlier published Purchasing Manager Index numbers shows that economic activities all around the globe are slowing, OPEC news lifted the prices. Currently, the Japanese economy is facing different issues, including higher commodities prices and a lower Yen value.
After weakness signs from Japan, we can also remark on the weakness in the Chinese economy. Asian markets, given that China is a major trading hub for the region, had an adverse reaction to that.
In the European season, concerns continued. As the published Purchasing Managers Index show, business activities in Eurozone declined for the second month in a row. The most rational reasons for this weakness could be higher prices and lower consumer confidence, resulting in spending. Lower consumer spending means fewer businesses for both the manufacturing and service sectors.
And then in the North American season, with lower S&P Global Composite PMI at 45.0 in august, -12.6% decline in the New Home Sales in July, and Service PMI at 44.1, we can say that fear of a coordinated global recession is now much more significant.
With all the global economy's weak signals, oil ignored these recession fears affecting demand, and prices continued to grow. In an interview with Bloomberg, Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman said that OPEC+ has the means and flexibility to deal with challenges. He continued by saying that most global oil producers are ready to cut production to control the prices and pause the recently seen correction.
On top of these, Tehran's 2015 nuclear deal is much closer to renegotiation, which can increase supply. However, damage to a pipeline system bringing oil from Kazakhstan through Russia increased the fears of facing fresh disruption to energy supplies in Europe and eliminating the effects of the news of a possible agreement with Iran. Add the reports that show the US crude inventory in the Strategic Petroleum Reserve (SPR) at its lowest level in more than 35 years, so how can we count on more downward correction?
As a result, while leading indices in major stock markets around the globe lost the gains of the first half of August, Brent crude gained 3.20 dollars, or 3.3%, to $99.90 at the time of writing, after a choppy session on Monday. Also, US West Texas Intermediate crude futures more than 3 dollars to trade above $93.30.
From the technical point of view also, we can see this sentient change with price return above the trend line and bullish signals stochastic.
