August 15, 2023 (MLN): Oil prices rose on Monday amid an unexpected rate cut by China, the world’s second-largest oil importer, to support its economy.
Brent crude is currently trading at $86.05 per barrel, up by 0.44% on the day.
While West Texas Intermediate crude (WTI) is trading at $82.23 per barrel, up by 0.42% on the day.
The People’s Bank of China (PBoC) unexpectedly lowered the one-year medium-term lending facility (MLF) rates by 15 bps to 2.5% to support its economy which is facing new threats from a deteriorating housing market and low consumer spending.
To note, this was the second time this year that the central bank lowered the MLF rate, after a 10 bps cut on June 13.
The National Bureau of Statistics (NBS) said in a statement that the domestic demand situation was still “insufficient” and the “economy’s recovery foundation still needs to be strengthened.”
China needs to “step up macroeconomic policy adjustment, and focus on expanding domestic demand, lifting confidence and preventing risks,” the statement added.
China's industrial output and retail sales data on Tuesday showed the economy slowed further last month, intensifying pressure on already faltering growth and prompting authorities to cut key policy rates to shore up activity, as Reuters reported.
Despite the weak macroeconomic data, China's oil appetite showed resilience.
The country's refinery throughput in July rose 17.4% from a year earlier, as refiners kept output elevated to meet demand for domestic summer travel and to cash in on high regional profit margins by exporting fuel.
Additionally, quarterly growth data for Japan smashed expectations on Tuesday as car exports rebounded and tourists flooded back.
Meanwhile, oil and natural gas output from top U.S. shale-producing regions is set to fall in September for the second straight month to the lowest levels since May, Energy Information Administration data showed on Monday.
The declining U.S. output could exacerbate the global oil supply tightness as the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are cutting production.
Copyright Mettis Link News
Posted on: 2023-08-15T11:59:02+05:00
