Oil prices rose after China took action to support the weakening economy. It rose on Monday, but investors remain concerned about the pace of growth and more US rate hikes that could dampen fuel demand.
Brent crude rose 19 cents, or 0.2%, to $84.67 a barrel by 0627 GMT, while West Texas Intermediate crude (WTI) was at $80.09 a barrel, up 26 cents, or 0.3%.
Brent and WTI reported second-week losses on Friday after Fed Chairman Jerome Powell said the US central bank may need to raise interest rates further to fight inflation, which is still very high.
Oil enjoyed a better tone at the open after China halved its stamp duty on stock trading in an attempt to revive struggling markets.
China has halved its stamp duty on stock trading from Monday in its latest attempt to revive the struggling market as the recovery slows in the world’s second-largest economy.
However, after the Chinese central bank’s rate cut last week, the above announcements mean small measures that won’t change investors’ pessimism towards China.
China’s manufacturing purchasing managers index (PMI), due later this week, will likely provide more negative economic news about the world’s second-largest economy, with the PMI remaining in contraction territory for the fifth consecutive month.
Despite the hawkish stance on rate hikes, Monday’s soft landing scenario for the US economy revived energy markets.
In the United States, energy firms cut the number of active oil rigs for a ninth month in August, Baker Hughes said in a report.
Also, Tropical Storm Idalia has formed in the Caribbean and could turn into a hurricane and hit Florida. While the hurricane is predicted to miss oil and gas hubs in the Gulf, the most likely impact could be a day or two of power outages. This can be expected to give short-term support to the oil price.
As a result, oil prices remained above $80 a barrel, supported by falling oil inventories and supply cuts from the OPEC+ oil producers community.
Regarding the supply, the narrative of tightening supply has been tempered by expectations of easing sanctions on Iran and Venezuela.
