SAT. 04 MARCH 2023-theGBJournal | Oil prices recovered quickly Friday after it dropped dramatically by $2 per barrel on rumours that the United Arab Emirates (UAE) was considering opting out of Organisation of Petroleum Exporting Countries (OPEC).
Nerves steadied in the market later when Reuters reported that the Emirate is not planning an exit. Brent quickly climbed back by 1%% to $85.47 per barrel. The West Texas Intermediate (WTI) crude futures also gained $1.04 to $79.20.
Both benchmarks are now on course for a weekly gain following optimism regarding China’s rebounding economy. Manufacturing activity in the country grew while services sector expanded at its fastest pace in six months in February.
China’s Composite PMI rose to a record high of 56.4 points in February (January: 52.9 points). The Manufacturing PMI settled at 52.6 points in February (January: 50.1 points) – the highest print since April 2012 (53.3 points).
We understand that the impressive factory activity primarily reflects the economy’s weak starting point coming into this year and continued improvement in the production climate.
Simultaneously, the Non-Manufacturing PMI settled higher at 56.3 points (January: 54.4 points) as businesses accelerated their resumption of work and production. Given that the current positive surprises from China are partly driven by the weak starting point entering into 2023, it suggests that the recovery momentum is likely to slow in the coming months.
Nonetheless, the country is now expected to grow solidly in 2023FY compared with 2022E growth print (+3.0% y/y) given the lifting of intermittent COVID-19 containment measures, and expectations that the government will roll out further supportive policies to keep the economic recovery intact.
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