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Crude-oil futures rose Thursday, snapping a string of losses as investors awaited for the upcoming OPEC meeting — just a week away — for a firmer direction on supplies and thus on prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December rose $1, or 1.3%, to settle at $75.58 a barrel. Futures on Wednesday had closed lower for a third straight session. January Brent crude on London’s ICE Futures exchange rose $1.23, or 1.6%, to $79.33 a barrel. Brent has also closed lower for three consecutive sessions.
Chinese factory activity fell to its lowest level in six months in November, with the preliminary HSBC China Manufacturing PMI falling to 50.0, compared with a final reading of 50.4 in October. The reading suggests that “manufacturing activity has continued to cool, but it also provided some hope that downward pressure on domestic demand has eased up so far in the fourth quarter,” Capital Economics said in a report.
The Nov. 27 OPEC meeting is expected to be the main driver of oil prices going forward. “No OPEC meeting for a long time has been preceded by such amounts of speculation and conspiracy theories,” analysts at JBC Energy said in a note Thursday. Wall Street has been divided over whether OPEC will cut production in order to put a floor to prices. Some have said only a few OPEC member countries can withstand, fiscally, the current low prices and will be pressuring other members for an output decline. Others see OPEC more concerned with preserving market share and able to withstand lower prices for longer. Morgan Stanley said it was pessimistic about OPEC intervention in oil markets as recently as one month ago, but now puts a two-thirds probability on OPEC either calling for stronger enforcement of its existing quota with a production cut, or an outright reduction of the quota. “The market has hit price levels and timelines that are consistent with prior reductions in the quota,” analyst Adam Longson said in a note.