Oil prices strengthen as China promises to support economic growth
On Wednesday (July 19), international oil prices saw a boost as China’s commitment to supporting economic growth reassured investors. NYMEX crude oil prices were at $77.71, with concerns about the outlook for U.S. demand lingering.
At 16:57 Beijing time, NYMEX crude oil futures rose 0.69% to $76.18 a barrel, while ICE Brent crude futures rose 0.89% to $80.34 a barrel.
CMC Markets analyst Leon Li stated, “With the Federal Reserve likely to raise interest rates for the last time in July, concerns remain that the outlook for U.S. demand may limit oil price gains.” However, he also mentioned the positive impact of China’s top economic planner promising to introduce policies to boost consumption, which could potentially increase oil demand.
Rystad Energy’s North America research director, Claudio Galimberti, added, “As long as China’s stimulus package is successful so far, even if Europe slips into a mild recession, the oil market balance will tighten significantly.”
On the supply side, the latest data from industry group the American Petroleum Institute (API) showed that U.S. crude fell less than expected last week. Additionally, Russia’s energy ministry announced that its oil exports would decrease by 2.1 million tonnes in the third quarter, in line with a voluntary export cut of 500,000 bpd in August.
PVM analyst John Evans commented on the market’s opening, stating, “One of the main reasons behind the market’s benign opening was the API report. People… were very disappointed because the firecrackers were lit with a whisper instead of a bang.”
Looking at the daily line, NYMEX crude oil started an upward trend from $73.78, with the upper resistance pointing towards the 38.2% target of $77.71.
Overall, the strengthening of oil prices was attributed to China’s commitment to economic growth and potential policies to boost consumption. However, concerns about U.S. demand and supply cuts will continue to impact the market.