Brent Above $72 After Monday's Rally
Brent crude oil was marginally higher on Tuesday after seeing its first rally in six months on Monday. The commodity traded at $72.03 at 6:15 GMT as investors took advantage of low prices.
After OPEC decided not to make a production cut at its meeting last week, oil prices began a downward spiral due to a growing supply glut and few indications of improving demand. Both Brent and WTI suffered losses with many analysts revising their estimates for the commodity to below $70.
CNBC reported that some analysts see the current price drop testing U.S. shale oil producers, something many have been anticipating for a long time. Though drilling new shale wells has continued at a rapid pace in spite of the commodity’s price, many see the industry starting to feel the effects in the coming weeks. With that said, energy companies in the United States will likely continue with business as usual unless prices dip markedly lower.
Related Link: Eurozone PMI Gives ECB More Reason To Ease
Meanwhile, economic data remained a major driver for crude prices as the investors tried to gauge the health of global demand. PMI data out on Monday gave markets some insight into how the world’s largest economies began the fourth quarter, though most of the figures were disappointing.
The eurozone’s manufacturing PMI reading was dangerously close to the 50 point mark that separates expansion and contraction at 50.1 and the world’s second-largest consumer, China, also had a troubling reading. China’s Markit manufacturing PMI came in a 50, a far cry from the 50.5 reading that analysts had expected. The United States fared better with a 53.3 reading, up from October’s 51.6 reading.
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