Brent Recovers on Promising Chinese PMI Data
Brent crude oil recovered from a trading low of $107.31 on Tuesday as investor fears of weakening demand were alleviated a bit. On Wednesday morning, Brent traded at 108.71, a steady climb from Tuesday's lows.
The commodity sunk after the equity market showed falling profit forecasts among large companies in some of the top oil consuming nations. On Wednesday, new data out of China injected a bit of hope into the market and supported Brent prices. Chinese PMI data showed that although their manufacturing sector shrunk again in October, the output was at its highest in three months.
The number two oil consumer's data served as a bit of relief for investors, but gains for the commodity were capped by poor PMI data out of Europe. In addition to troubling economic data, a Bloomberg survey of German business sentiment showed a drop for the sixth consecutive month.
Supply fears still lend support to Brent prices since the tension in the Middle East has continued to escalate. CNBC reported on Wednesday that Iranian oil minister Rostam Qasemi stated that his country would no longer export oil to the West if the sanctions became any tighter. Western countries have been adding sanctions to Iran in an effort to stop the country from pursuing its nuclear development program.
So far, the sanctions have done little to slow Iran's nuclear development except create a drop in Iranian oil exports. According to Qasemi, the country has a “Plan B” to survive should its oil exports to the West cease.
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