As of Monday at 15:00 GMT, WTI and Brent, the two main benchmarks, were recorded at $60.30 and $64.28 respectively.
Although the US and China, the world's two top economies, took steps not to escalate the 'tariff war' from where it was a few weeks ago, the tension has taken its toll on both countries. For the US, recent polls indicated affordability issues for ordinary citizens, exacerbated by the tariff disputes. Inflation remains a major concern that the current incumbent effectively used as a campaign issue, having been a significant problem during the prior administration. The Trump administration similarly failed to manage this twin crisis, leaving Americans feeling sandwiched between a lack of affordability and inflation.
Meanwhile, in China, the manufacturing sector shrunk significantly in October. China's manufacturing PMI, the statistic that gauges manufacturing activity, declined from 49.8 in September to 49.0 in October. A reading above 50 indicates growth, while a reading below this threshold points to a contraction in the manufacturing sector. The PMI was only above 50% in February and March of 2025. Although it steadily improved from July 2025, the October figure reversed this trend, signalling a decline in manufacturing activity.
This contraction in Chinese manufacturing suggests that the demand for oil and gas may follow suit in direct proportion, resulting in a bearish sign for energy markets. China is not only the biggest importer of crude oil but has also been the main driver of global oil demand growth, especially in Asia, for years. Therefore, any change in its economic or manufacturing sentiment affects both investors and traders.
While the simple correlation between oil and gas demand and Chinese manufacturing activity still holds, the impact may be mitigated by a few recent trends in China. For instance, China's ambitious drive to promote electric vehicles (EVs) and electrify railway tracks could potentially mitigate long-term demand for oil and gas and mute the impact of the PMI on oil prices. However, geopolitical factors, such as the global economy and regional conflicts, particularly in the Middle East, can still outweigh the direct impact of the Chinese manufacturing data. Oil prices did not record considerable growth even when the PMI was in positive territory in February and March this year.
All in all, the Chinese manufacturing PMI will remain a reliable indicator to gauge the short-term direction of prices, and there is no sign that investors and traders are doing otherwise at present.
