Oil rebounded by more than 3 percent from a three-month low as China weighed measures to revitalize the world’s second-largest economy.
West Texas Intermediate futures rose above $69 a barrel after three sessions of losses. China surprised economists on Tuesday by cutting short-term interest rates, and Beijing is also considering a broad stimulus package. US inflation slowed in May, prompting the Federal Reserve to hold off on interest rate hikes.
“Risk is on” as markets assess the slowdown in US inflation and yesterday’s oversold crude, said Daniel Ghali, commodities strategist at TD Securities. Investors will be on the lookout for “extending inventories or deep deficits this coming quarter for crude oil and timing spreads to sustain a sustainable uptrend.”
Crude oil has been hit this year by a lackluster recovery in China, the world’s biggest oil importer, highlighted recently by sluggish trade data and international flights that are still well below pre-pandemic levels. Saudi Arabia’s promise to further cut output in July did not encourage traders, with key market indicators pointing to weakness and a bearish contango structure moving further along the futures curve.
Resilient Russian exports add to the downward pressure. Goldman Sachs Group Inc. cut its oil price forecast for the third time in six months on Sunday, saying it sees rising supplies and falling demand.
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— With the assistance of Julia Fanzeres and Chunzi Xu.
