Oil prices rose on Monday in line with rising stock markets after China took steps to support its struggling economy, although investors remain concerned about the pace of growth and rising U.S. interest rates, which could dampen fuel demand. By 00:49 GMT, Brent crude had increased by 22 cents or 0.3% to $84.70 a barrel, while U.S. West Texas Intermediate crude was up 25 cents or 0.3% at $80.08 a barrel.
Tony Sycamore, an analyst at IG Markets, stated that oil benefited from positive indications at the opening after China halved stamp duty on stock trading as part of its latest attempt to boost faltering markets. He added, "Unfortunately, following the modest interest rate cut issued by the People's Bank of China last week, the aforementioned announcements are another incremental measure that will not change investors' pessimism towards China."
Sycamore noted that the Purchasing Managers' Index (PMI) for manufacturing in China, set to be released later this week, is likely to reveal more gloomy economic news concerning the world's second-largest economy. He suggested that the PMI is expected to remain in contraction territory for the fifth consecutive month.
Tina Teng, an analyst at CMC Markets, mentioned that the soft landing scenario for the U.S. economy has boosted energy markets on Monday despite the Federal Reserve's insistence on continuing to raise interest rates. Both Brent and West Texas Intermediate crude recorded losses for the second week on Friday after Federal Reserve Chair Jerome Powell indicated that the central bank may need to raise interest rates further to temper persistent inflation.
Nevertheless, oil prices remained above $80 a barrel, supported by declining oil inventories and supply cuts from the OPEC+ group of oil producers.
