Oil prices rose in Asian trade on Tuesday, buoyed by the prospect of supply cuts in the world’...
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Oil prices rose in Asian trade on Tuesday, buoyed by the prospect of supply cuts in the world’s largest crude producers, while expectations of more stimulus measures in major importer China also helped support sentiment.
Still, caution over upcoming U.S. inflation data and Federal Reserve speakers kept gains limited, as markets sought more cues on the world’s largest oil consumer.
Crude prices had a weak start to the week amid fears of rising U.S. interest rates and worsening economic conditions, following hawkish signals from Fed officials and weak economic data from China.
But losses were somewhat limited as Fed officials also signaled an eventual end to the bank’s rate hike cycle, while the Chinese government also extended some stimulus measures to support the economy.
The prospect of tighter supplies, as major producers Saudi Arabia and Russia vowed more production cuts, also presented a bullish case for oil prices.
Brent oil futures rose 0.3% to $78.04 a barrel after briefly hitting a two-month high on Monday, while West Texas Intermediate crude futures rose 0.5%, staying within sight of a one-month high.
Oil markets were focused squarely on upcoming U.S. consumer price index inflation data, due on Wednesday. The reading is widely expected to factor into the Federal Reserve’s plans for future rate hikes.
More signals from the Fed are also due, with members Neel Kashkari and Loretta Mester set to speak later in the week.
Fears of rising U.S. interest rates and a stronger dollar kept oil prices trading negative for the year, amid growing fears that economic conditions will worsen later in the year, denting crude demand.
But a substantially weaker-than-expected nonfarm payrolls report for June pushed up some hopes that the Fed will eventually be pushed into tapering its hawkish stance.
The central bank is expected to hike rates by at least 50 more basis points this year, starting with a 25 basis point hike by end-July.
Weak inflation readings from China, which showed consumer inflation on the brink of contraction, also pressured oil markets on Monday.
But the reading drummed up hopes for more emergency spending measures from Beijing to support the economy.
The People’s Bank of China on Monday extended some policy support for the massive real estate sector until the end of 2024, as it moves to shore up Chinese economic growth.
A growing number of market participants and analysts are now calling for more policy support from the government to avert a slowdown in the world’s largest oil importer, as it struggles to recover from three years of COVID disruptions.
Weakness in China has largely undermined bets that the country will drive oil demand to record highs this year. - investing
