Oil steadies as US Services growth surpasses expectations – London Business News | Londonlovesbusiness.com

Crude oil, across the two major benchmarks, is on track to snap its daily losing streak since last Friday and is up nearly 1%.

The gains in crude come as services activity performed better than expected and manufacturing performed worse than expected in the U.S. versus a mixed performance in eurozone.

Focus remains on what Jerome Powell statements in Jackson Hole and the outcome of the Gaza ceasefire negotiations.

Service activity growth in August showed signs of sustained expansion in the third quarter, while manufacturing activity continued to contract, this time at the fastest pace in 14 months. Demand remained strong in the services sector, unlike manufacturing, which saw a second straight month of falling new orders, according to S&P Global.

Looking ahead, sentiment around output has improved compared to July but remains below the long-term average, pressured by pessimism in the manufacturing sector amid uncertainty over the presidential election and future demand.

In the eurozone, one of China’s largest trading partners, the picture was mixed and tended to show more weaknesses in the region’s economy, which does not help to raise expectations for oil demand there.

While private sector activity continued to grow overall at the fastest pace in three months, new orders, employment and sentiment continued to provide negative signals about the region’s economy, according to S&P Global. Today’s PMI reports also indicated that sentiment fell to its lowest levels this year in the eurozone and its lowest since January and October in Germany and France, respectively.

Geopolitical tensions in the Middle East could be an important factor in oil price movements in the coming days or weeks, although markets seem to have forgotten the potential impact of the regional war on the security of energy supplies from the region.

In reality, wars are not without surprises, and we do not know where their borders may extend temporally or geographically. The war in Gaza, for example, has so far led to a massive disruption of navigation in the Red Sea and flights in the skies of many countries, as well as boycott campaigns. So how can a multi-front regional war?

While the round of negotiations, which Hamas will not attend, is being resumed in Cairo in an attempt to achieve some progress, negativity surrounds it and it is likely that it will not be able to achieve any breakthrough, which keeps the specter of a regional war present.

The Israeli side is still insisting on not leaving Gaza and maintaining its control over the Philadelphi and Netzarim axes. Israeli Prime Minister Benjamin Netanyahu said that he is not sure about reaching a deal and stressed that Israel will not leave the buffer zone between Gaza and Egypt and the one that divides the Strip into north and south, according to The Wall Street Journal.

This will certainly not be accepted by Hamas, which will keep the negotiations futile. Netanyahu’s comments drew criticism from US State Department officials, with one official accompanying Secretary of State Antony Blinken saying the that “maximalist statements” was not constructive to reaching an agreement, according to The Journal.

In addition, Hamas will not accept any deal because it has received only “promises” and not “guarantees” about a permanent ceasefire or even an Israeli withdrawal from the border areas, Egyptian officials familiar with the negotiations told The Associated Press.