Crude Caught Between Opposing US/China Views

Better US Data Supporting OilCrude prices are trading a little firmer on Friday with crude futures on course to end the week in the green. Better data out of the US is supporting the view that the US will avoid a recession, adding support for the crude demand outlook. However, while data out of the US is helping lift sentiment, expectations of further tightening from the Fed is offsetting this strength. Additionally, concerns over the health of the Chinese economy are also having a depressing impact on oil prices.Weak China Data Weighs on OilThe latest data out of China this week gave little reason for optimism. The manufacturing PMI was seen holding below the 50 level again last month, keeping the demand outlook for crude there skewed to the downside. Looking ahead, the big focus next week will be on the OPEC+ meeting. Given that oil prices continue to hold near-lows, despite Saudi Arabia announcing further voluntary cuts last month, the risk is that the group will announce new co-ordinated production cuts aimed at driving oil prices higher near-term. Given the backdrop, unless such a move is announced, oil prices are unlikely to find enough reason to trade higher near-term.Technical ViewsCrudeThe rally in crude prices this week has done little to move price out of the 65.34 – 72.61 range which has framed price action over the last two months. With momentum studies flattened, two-way risks are seen. However, given the broader down-trend, the outlook looks skewed towards lower prices longer-term unless bulls can break above the range highs and bear trend-line.