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Oil Prices Little Changed as Middle East Conflict Eases, Uncertain Chinese Demand Outlook

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Oil prices remained relatively stable on Friday, but were on track for a second consecutive week of losses. Concerns over supply, driven by the conflict in the Middle East, have eased, while the demand outlook from China, the world’s top crude importer, remains uncertain.

At 0955 GMT, Brent crude futures were down 13 cents, or 0.1 percent, at $86.72 a barrel, while U.S. West Texas Intermediate crude futures slipped 10 cents, or 0.1 percent, to $82.36 a barrel. Although both benchmarks saw gains of over $2 a barrel on Thursday, they are expected to end the week with a 4 percent loss.

The manufacturing activity in China unexpectedly contracted in October, with the official purchasing managers’ index (PMI) falling to 49.5, below the 50-point level that signifies contraction. This data was released by the National Bureau of Statistics on Wednesday. However, a private sector survey released on Friday showed that China’s services activity expanded slightly faster in October, although sales growth was the slowest in 10 months and employment remained stagnant.

In addition to concerns about demand from China, the U.S. Labor Department is expected to release an employment report later on Friday that could show labor market conditions steadily easing. There has been minimal growth in annual wage, the smallest increase in nearly two and a half years, and a significant increase in the supply of workers. This report could strengthen the view that the U.S. Federal Reserve does not need to raise interest rates further.

The Federal Reserve recently held interest rates steady, and the Bank of England also kept rates at a 15-year peak. These stable policies have supported oil prices as some risk appetite returned to the markets.

Despite these factors, geopolitical concerns remain prominent. Israeli forces have encircled Gaza City, the main city in the Gaza Strip, in their attack on Hamas. The Palestinian terrorist group, however, has resisted their efforts with hit-and-run attacks from underground tunnels. Fiona Cincotta, an analyst at City Index, stated, “The oil market will be watching for an escalation of tensions, particularly on the Lebanese border, as Hezbollah attacks increase.”

In terms of supply, it is expected that Saudi Arabia, the top oil exporter, will announce an extension of its voluntary oil output cut of 1 million barrels per day through December. This is based on analyst expectations.

Overall, the oil market is facing a mix of factors that are contributing to its stability. While concerns over supply have eased, uncertainty remains due to the demand outlook from China and potential labor market conditions in the United States. Geopolitical tensions also add an element of risk to the market. The actions of major oil producers, such as Saudi Arabia, will continue to be closely monitored by industry analysts and investors.

More detail via www.theepochtimes.com here… ( Image via www.theepochtimes.com )

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