Oil prices rose on Monday after China changed its liquidity measures to help its pandemic-affected economy, feeding hopes for a better fuel demand outlook from the world’s largest importer of crude oil. China has pledged to increase its energy supply and reserve capacity.
Brent crude futures rose 81 cents, or 0.88%, to $92.44 as of 0642 GMT, after falling 6.4% last week. West Texas Intermediate (WTI) crude was up 72 cents, or 0.84%, to $86.33 a barrel, after falling 7.6% last week.
China’s central bank rolled over its maturing medium-term policy loans on Monday while keeping the interest rate unchanged for a second month.
Analysts said this is a sign that the central bank will continue to maintain the loose monetary policy.
The country has pledged to greatly increase domestic energy supply capacity and increase risk controls on key commodities such as coal, oil, gas, and electricity, a senior National Energy Administration official said on Monday.
Another government official said that China will further increase its reserve capacities for key commodities.
Oil found support from a number of factors, including Chinese President Xi Jinping’s comments at the Party Congress that gave confidence in supportive policies for the economy, which is a positive sign for the demand outlook.
China is expected to release its trade and economic data this week. While third-quarter GDP growth may rebound from the previous quarter, President Xi’s strict COVID-19 policy is putting the world’s No. 2 economies in what is likely to be the worst-performing year in nearly half a century.
Looking ahead, oil prices are expected to remain volatile as output cuts by OPEC+ tightened supply ahead of the European Union’s embargo on Russian oil, and a strong US dollar and additional hikes in interest rates from the US Federal Reserve restrained price increases.
Some US officials say inflation has become harmful and difficult to contain.
OPEC and its allies, including Russia, lined up to approve the sharp production cut agreed upon this month after the White House’s duel of words blaming Saudi Arabia and began backing the move.
OPEC+ has pledged to cut production by 2 million bpd on October 5, which will likely result in a reduction of around 1 million bpd as some members are already producing below their targets.
Despite all this, Saudi Arabia, one of the strongest exporters, will keep its exports to the important Asian markets stable in November.
Undoubtedly, tight stocks and increased supply risks for oil and petroleum products will keep prices volatile.
