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Oil steadied as China signalled further economic aid for its ailing property sector, bolstering the outlook for fuel demand in the world’s top crude importer.
West Texas Intermediate futures held near US$73 a barrel, as Beijing pressured banks to ease terms for property companies and key state-run newspapers indicated that additional support measures may be on the way.
China’s sluggish economic rebound from the Covid pandemic has posed headwinds for crude prices this year, along with monetary tightening by central banks and resilient crude flows from producers including Russia and Iran.
“From a perspective of risk appetite, the Chinese measures are important but not enough to move the needle, and more initiatives will be needed,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S.
Oil prices have also been supported by OPEC+ heavyweights Saudi Arabia and Russia, who announced supply curbs over the summer in a bid to tighten inventories and prop up the market.
On the demand side, the US economy has shown signs of resilience. Data released last week from ADP Research Institute in collaboration with Stanford Digital Economy Lab showed that US companies added almost half a million jobs last month, the most in over a year.
“Oil prices overall are staying firm,” Hansen said. “US economic data continues to show enough strength to reduce the risk of a recession, and the Saudi production cut has helped support short-covering as it reduces the risk of a slump into the US$60s.”
Traders will be watching the US consumer price index read on Wednesday for clues on the path forward for interest rates, and monthly reports from OPEC and the International Energy Agency on Thursday for snapshots of the oil market. –Bloomberg
Online Reporter