A report on the unprecedented boom in the Chinese services industry has triggered the oil prices to spike nearly 4% on Wednesday, amidst downward trend caused by global economic woes and the trade war between U.S. and China that hurts the price per barrel.
The report which triggers the spike relates to the favorable economic data that came in from a private survey of China’s services sector. According to the report, in the month of August, an unexpected growth has been seen in the industry triggering an increase in hiring and employment to meet the new demand. The report noted that the increase seen in August is the fastest rate in the last three months.
China, a major consumer of crude oil, imported 10.64 million bpd in April—a new record for China. However, the tension between the country and the United States has impacted the oil industry for the last few weeks.
Having lost 5.9% in August, futures once again dropped to trade near $55 a barrel in New York earlier this week, after the deepening trade war between the United States and China continues to put pressure and uncertainty on the oil market.
The new drop follows the taking effect of the latest round of tariffs imposed by the U.S. on Chinese goods on Sunday. The new tariff imposed by Trump administration for the first time includes oil, thus directly affecting the industry considering that the U.S. is one of the biggest exporters of crude oil, and China is one of the biggest importers.
“Economic uncertainty will continue to dominate the oil market’s agenda as new U.S. and China trade measures come into effect,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “The market is more and more resigned to a protracted stand-off and will be looking toward central-bank easing to shore up risk appetite to help overcome the prevailing hesitancy in going long oil.”