China\u2019s factory activity is expected to have continued to grow in February, a Reuters poll showed on Monday, suggesting that the flashes of domestic demand seen since the zero-COVID policy ended are now strong enough to rekindle upstream sectors, Reuters reported.<\/p>\n
Domestic orders and consumption drove output higher and saw economic activity in the world\u2019s second-largest economy swing back to growth in January, and economists expect manufacturers to have consolidated that position now that the country\u2019s COVID-19 epidemic has \u201cbasically\u201d ended.<\/p>\n
The official manufacturing purchasing managers\u2019 index (PMI) is expected to have improved to 50.5 in February, compared with 50.1 in January, according to the median forecast of 29 economists in a Reuters poll.<\/p>\n
We\u2019re bullish on crude oil because of the Russian output cuts and China\u2019s improving recovery. But we also acknowledge that the market is facing some serious headwinds with the Fed likely to raise rates 25-basis points rate in March, May and June, respectively. This is expected to keep the U.S. Dollar unpinned while bringing the economy closer to recession.<\/p>\n
Like the Fed, commodity markets are going to be data dependent until the Fed signals a pause in rate hikes. So we\u2019re expecting to continue to see volatility as the Fed moves to tame inflation by possibly driving the economy into recession.<\/p>\n
Traders will also be looking to the latest U.S. oil stocks data due from the American Petroleum Institute (API) industry group on Tuesday and the government\u2019s Energy Information Administration on Wednesday for further demand indicators.<\/p>\n