Oil rises on China moves to support economy; tropical storm eyed
Brent crude rose 40 cents, or 0.5%, to US $84.88 a barrel by 0820 GMT, while U.S. West Texas Intermediate crude gained 42 cents, or 0.5%, to US $80.25
Oil ticked higher on Monday after China took steps to bolster its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen demand.
China halved stamp duty on stock trading in the latest attempt to boost struggling markets.
Brent crude rose 40 cents, or 0.5%, to US $84.88 a barrel by 0820 GMT, while U.S. West Texas Intermediate crude gained 42 cents, or 0.5%, to US $80.25.
The focus today is on “China actions to support its economy, Tropical Storm Idalia heading for Florida and whether Brent can regain momentum on a break above $85,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Tropical Storm Idalia could strengthen into a hurricane on Monday, bringing high winds and storm surges to Cuba and Florida later this week.
U.S. Gulf storms and hurricanes can have an effect on oil markets because of their potential to disrupt offshore installations and refineries.
Idalia’s most likely impact is a day or two of power outages, said IG market analyst Tony Sycamore. That “should see some short-term support for the oil price,” he said.
Brent and U.S. crude posted a second week of losses on Friday after Fed Chair Jerome Powell said the U.S. central bank may need to raise rates further to cool still-too-high inflation.
Still, CMC markets analyst Tina Teng said a soft-landing scenario for the U.S. economy buoyed energy markets on Monday, despite the Federal Reserve’s hawkish stance on rate hikes.
Oil prices have remained above $80 a barrel with support from falling oil inventories and supply cuts from the OPEC+ group of oil producers.
Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day into October, analysts told Reuters last week, as the kingdom seeks to provide further support for the market.
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