Russia is the wild card keeping oil prices down: Portfolio manager Jack Janasiewicz
Oil rebounded by more than 3 per cent from a three-month low as China weighed measures to revitalize the world’s second-largest economy.
West Texas Intermediate futures climbed above US$69 a barrel after three losing sessions. China surprised economists Tuesday by cutting short-term interest rates, and Beijing is also considering a broad package of stimulus measures. U.S. inflation slowed in May, bolstering the case for the Federal Reserve to pause interest rate hikes.
“Risk is on” as markets assess slowing U.S. inflation and yesterday’s overselling in crude, said Daniel Ghali, a commodity strategist at TD Securities. Investors will be keeping an eye on “drawing inventories or deep deficits this coming quarter for crude oil and time spreads to sustainably trend higher.”
Crude has been weighed down this year by a lackluster recovery in China, the world’s largest oil importer, highlighted recently by sluggish trade data and international flights that are still far below pre-pandemic levels. Saudi Arabia’s pledge to further cut output in July failed to embolden traders, with key market gauges pointing to weakness and a bearish contango structure creeping further along the futures curve.
Resilient Russian exports are adding to the downward pressure. Goldman Sachs Group Inc. lowered its oil price forecasts for the third time in six months on Sunday, saying it sees supplies swelling and demand waning.
- WTI for July delivery rose US$2.30 to settle at US$69.42 a barrel in New York.
- Brent for August rose US$2.45 to settle at US$74.29 a barrel.