Oil rebounded from its lowest level in almost three months as China weighed measures to kickstart the world’s second-largest economy.
(Bloomberg) — Oil rebounded from its lowest level in almost three months as China weighed measures to kickstart the world’s second-largest economy.
West Texas Intermediate futures climbed above $69 a barrel after losing more than 7% over the previous three sessions. China surprised economists Tuesday by cutting short-term interest rates, and Beijing is also considering a broad package of stimulus measures. US inflation slowed in May, bolstering the case for the Federal Reserve to pause interest rate hikes.
“Risk is on” this morning as markets assess slowing US inflation and yesterday’s overselling in crude, said Daniel Ghali, a commodity strategist at TD Securities. Investors will be keeping an eye on “drawing inventories or deep deficits this coming quarter for crude oil and time spreads to sustainably trend higher.”
Crude has been weighed down this year by a lackluster recovery in China, the world’s largest oil importer, highlighted recently by sluggish trade data and international flights from Northeast Asia that are still far below pre-pandemic levels. Saudi Arabia’s pledge to further cut output in July failed to embolden traders, with key market gauges pointing to weakness in recent days and a bearish contango structure creeping further along the futures curve.
Resilient Russian exports are adding to the downward pressure. Goldman Sachs Group Inc. lowered its oil price forecasts for the third time in six months on Sunday, saying it sees supplies swelling and demand waning.
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–With assistance from Julia Fanzeres.
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