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Oil adds $1 on China central bank talk; Weekly loss stays

Published 08/16/2023, 09:06 PM
Updated 08/17/2023, 02:16 PM
© Reuters. -- Has the great China recovery resumed? One might think so, looking at oil bulls’ optimism Thursday after the vow by Beijing’s central bank to get its economy moving. 

Crude prices rose for the first time in four days, tacking on more than $1 per barrel in the latest session, while remaining down on the week after the pledge by the PBOC, or People’s Bank of China, which now has to be matched by action.  

New York-traded West Texas Intermediate, or WTI, crude settled Thursday’s trade up $1.01, or 1.3%, at $80.39 a barrel. WTI lost 4.6% in three prior sessions, leaving it down more than 3% on the week.

That was a breakaway from a previous seven-week rally triggered by a bull fervor over Saudi production cuts that lifted the U.S. crude benchmark by 20% in that period, resulting in a 9-month high of $84.89 for a barrel.

London-based Brent crude finished the New York session up 67 cents, or 0.8%, at $84.12. Week-to-date, Brent was down around 3% after a seven-week rally that gave oil bulls an 18% return and a seven-month high of $88.10.

The oil rally ran into trouble this week after one bad patch of economic data after another released by China, the world’s top crude importer. July was a particularly woeful month for what is also the world’s number two economy, with bank loans sliding to a 14-year low; consumer and producer prices declining and exports sliding their most since February 2020. The yuan also tumbled against the dollar, adding to the weight on commodities, particularly oil.

China central bank plans "precise and forceful" stimulus

The PBOC vows to change all that now, saying it would keep liquidity reasonably ample and keep its policy "precise and forceful" to support the country's economic recovery, amid rising headwinds.

China’s central bank unexpectedly cut key benchmark interest rates for the second time in three months on Tuesday, in a bid to support a sputtering economic recovery. Markets widely expect the bank to loosen monetary policy further. On Thursday, the PBOC said it will "better leverage the dual functions of aggregate and structural monetary policy tools and firmly support the recovery and development of the real economy". 

(Additional reporting by Peter Nurse in London and Ambar Warrick in Singapore)


Latest comments

tank the market! keep the puts printing 🤑
Yet, 'EIA says that legacy oil production decline rates from tight shale oil basins in the US reached record levels per DPR data.' Many here blame OPEC when team Biden is discouraging new well investments in US.
Oil longs are famously creative for making it look like Biden totally annihilated the industry when the truth is there are more drilling leases and land than necessary for the purpose of producing oil profitably. The argument of the bull community is simply that: Sheer, unadulterated bull. And Phil Flynn, who happens to be a friend with different views, helps perpetuate that bull.
Hi Mr Barani. This is from World Oil magazine. Enverus has some data on the Permian that is interesting. “(Bloomberg) – The drop in output from U.S. shale wells is forcing oil drillers to work harder to keep production from slipping, research firm Enverus said in its latest report.” The premium areas that are considered the top tier acreage are getting drilled up faster than anticipated. However, the industry is always one new technology away from doing better in the tier 2 and 3 areas. They invest a lot in R&D to keep that oil flowing. When I first got into the industry the US was on a stready oil decline and the US producers worked very hard and spent tons of $ on the shale technology (i was part of it and had many “train wrecks” that were extremely costly). If it wasn’t for those things, Saudi/OPEC would have us begging about now. Sometimes that is forgotten. Good day to you and i am enjoying your articles!
 Thanks for that wonderful insight, sir. I love your inputs as well. Have a blessed weekend and week ahead!
Seems China's economy moved global economy....... everything are related to China........
The title of the article just changes after the oil price development. Useless.
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