The price of the ICDX oil contract on a weekly basis closed higher by 6 percent for the week ended March 3 supported by sentiment from the release of China's latest economic data which showed the manufacturing sector in February in the world's first largest oil importer country rose to 52.6, which is also the fastest growth rate in over a decade. China's non-manufacturing sector also grew positively, or rose 2 points on a monthly basis. Positive signals of China's economic growth have fueled market optimism for oil demand to also increase.
In addition, the latest report released (1/3) by an Indian trading source showed a positive growth in oil demand in the world's third largest oil importing country, where oil imports from Russia by India throughout February were reported to have risen to its highest level in six months. Fuel demand is also projected to increase by 4.7% in the next fiscal year, which will start on April 1.
Meanwhile, ahead of the close of the week (3/3) news circulated that there had been an internal split within OPEC, wherein the news published by The Wall Street Journal stated that one of OPEC's core members, namely the United Arab Emirates (UAE), which is also a producer the third largest in OPEC after Saudi Arabia and Iraq, intends to leave the alliance. This news had shaken world oil prices, before finally subsiding again after a UAE official confirmed that they would stick to the agreement made with OPEC, at least until the end of this year (4/3).
Russia - UAE Signal of Strengthening Cooperation
A sign of increased cooperation between Russia, which is a leader of OPEC allies, and the UAE, which is a core member of OPEC, can be seen from Russian oil shipments to the UAE, which rose by around 1.5 million barrels since November 2022, according to the latest data released by tanker tracking company Eikon. The increase in Russian oil sales indicated that the UAE chose to ignore pressure from the US in terms of isolating Russia regarding the Ukraine conflict. Besides that, as a core member of OPEC, the attitude of the UAE also indicates OPEC's support for Russia, while maintaining not to add more supply even though there is a potential reduction in output from Russia.
US House of Representatives Plans to Meet President of Taiwan
After the recent spy balloon incident that sparked an increase in tensions between the US and China, on Monday (6/3), US House of Representatives Speaker Kevin McCarthy reportedly plans to meet Taiwanese President Tsai Ing-wen in the US in the coming weeks. If this happens, it is very likely that the meeting between the US and Taiwan will trigger tensions between the US and China to escalate, considering that the previous visit by Speaker of the House of Representatives Nancy Pelosi to Taiwan last August had made China react violently. Escalation in US and China tensions will also put further pressure on global economic growth, which is currently still not fully recovered after the Covid pandemic.
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Source: ICDX Research