Oil Advances After China Announces Sweeping Support Measures
Oil rose after Chinese authorities unveiled a package of support for the economy, and a big Israeli strike on Hezbollah targets in Lebanon kept tensions high in the Middle East.
Brent crude rose near $75 a barrel after dropping 0.8% on Monday, with West Texas Intermediate above $71. People's Bank of China Governor Pan Gongsheng announced a series of stimulus measures at a briefing on Tuesday in Beijing, as policymakers made their broadest swing so far to hit this year's annual growth target of about 5%.
Concerns over the flagging Chinese economy and the prospect of increased supplies from OPEC+ have combined to undermine oil prices, which are down by around 13% so far this quarter. The measures announced Tuesday — which include boosting banks' lending to consumers and corporates and a cut to the PBOC's key short-term interest rate — could support growth and energy demand in the world's biggest oil importer.
"The stimulus is no big bazooka setting commodity prices on fire but rather aimed at carrying the Chinese economy to its target growth of 5%," said Bjarne Schieldrop, chief commodities analyst at SEB AB. "The planned increase by OPEC+ is hanging over the market as a dark cloud."
In the Middle East, Israel attacked targets across southern Lebanon, killing almost 500 people in the deadliest day of strikes since its 2006 war with Hezbollah. Iran, which backs the group, had said earlier that it was prepared to de-escalate tensions. Options markets have been charging smaller premiums for bearish put options since the most recent escalation began.
Brent for November settlement added 2.0% to $75.35 a barrel at 9:57 a.m. in London.
WTI for November delivery rose 2.1% to $71.88 a barrel.
Source : Bloomberg
