Crude Starts Week Higher On Better China Manufacturing PMI & Geopolitics

After falling moderately on Friday, oil prices are higher during APAC trading today driven by a pickup in China’s Caixin manufacturing PMI and geopolitical uncertainty in the Middle East, US and Europe. WTI is up 0.3% to $81.82/bbl after breaking above $82 briefly. Brent is also 0.3% higher at $85.30/bbl after a high of $85.49. The USD index is down 0.1%.

• China’s Caixin manufacturing PMI for June rose to 51.8 from 51.7, higher than expected and the highest in three years. Uncertainty over the strength of China’s economy has concerned oil markets as the country is the world’s largest crude importer and so this data will be welcomed. However the official manufacturing PMI released Sunday was stable at 49.5, still in contractionary territory.
• In terms of geopolitics, right-wing National Rally’s win in first round elections in France could not only derail French reform but also destabilize the European Union depending on second round results on July 7. Tensions between Israel and Hezbollah in Lebanon have also escalated. In addition, US President Biden’s weak performance in last week’s election has clouded the election outlook.
• The market remains optimistic on oil with prompt spreads suggesting the market is tight and money market net longs increasing, according to Bloomberg.
• Later US June manufacturing ISM/PMI, European PMIs and preliminary June German CPIs print. Also ECB President Lagarde speaks.