LONDON, Aug 17 (Reuters) – Crude oil prices jumped more than 1% on Thursday after the People’s Bank of China tried to stem growing pessimism about the country’s property market and the economy in general.
Prices slumped in the previous session on persistent concerns about the impact on fuel demand of a deepening property crisis that has dampened China’s economic momentum and the possibility of another U.S. interest rate hike.
Brent crude futures rose $1.08 to $84.53 a barrel by 1313 GMT, while US West Texas Intermediate crude (WTI) rose $1.18 to $80.56 a barrel.
OANDA analyst Edward Moya said it was only a matter of time before oil prices found support after falling nearly $6.
Analysts said prices were rebounding on hopes that Chinese authorities would take meaningful stimulus measures and oil markets would continue to tighten.
Following the People’s Bank of China’s announcement that it would maintain “correct and strong” policies to support the country’s economic recovery, Naeem Aslam of Zaye Capital Markets said: I like the fact that they don’t tolerate weakness.”
Minutes of the Federal Reserve’s July meeting, released Wednesday, showed officials did not push hard to pause rate hikes to prioritize fighting inflation. US interest rates continue to be the focus of attention.
Higher interest rates could increase borrowing costs for businesses and consumers, slowing economic growth and reducing oil demand.
On a more bullish note, China cut crude oil inventories exceptionally in July, falling into savings for the first time in 33 months.
U.S. crude inventories fell by nearly 6 million barrels last week on strong exports and refinery capacity utilization, according to data released Wednesday.
Oil broker PVM’s John Evans said that if markets had received such data when the macroeconomic environment was more friendly, reports of market tightening would be in the news rather than today’s disastrous financial problems. He said it would have been on the top of the screen.
OANDA’s Moya added that oil prices are likely to find a home near the $80 level as there are still too many risks to the macroeconomic outlook.
Reporting by Natalie Grover Additional reporting by Katya Golubkova and Sudarshan Varadhan Editing by David Goodman and Christina Fincher
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