Brent oil, which ended February with a decline, started March positively with better-than-expected data from China. Oil prices, which rallied in the first half of 2022 due to the war, have been losing value since June 2022. In February, the bear was weak due to expectations of higher interest rates from the Fed, but gains were erased later in the day.
Manufacturing PMI indicators in China, the world’s largest oil importer, rose above the growth threshold, indicating that economic activity is increasing. After the positive data, Brent crude rose to $84.20 and crude oil to $77.70. However, the benchmark Brent crude gave back much of its gains later in the day, dropping to $83.
In global markets, the focus was on inflation, which showed movement in January and February. Germany’s inflation, which was announced today, increased by 0.8% in the last month. Tomorrow, Eurozone inflation will be announced. If the rise continues, it means that the ECB will extend its interest rate hike cycle. Expectations are for a 50 basis point interest rate hike to continue in March.
In the US, with inflation picking up again, the expected interest rate hike process from the Fed has also been extended. Expectations are for a total of 75 basis point interest rate hikes in the next three meetings.
Inflation and interest rates continue to be the main reasons for pressure on oil.