Prior to the announcement of China's lending benchmarks, oil prices fluctuate in early trade

20 Jun 2023 , 10:58 AM

Tuesday’s oil prices were uneven ahead of China’s announcement on lending benchmarks; it is largely anticipated that China will lower key rates to support a sluggish recovery.

Brent crude had increased by 3 cents to $76.12 a barrel. Due to a United States holiday, there was no settlement on Monday, keeping the price of U.S. West Texas Intermediate (WTI) crude at $71.29.

The price of a barrel of WTI crude oil with a July 20 delivery date fell by 58 cents to $71.35.

According to a Reuters survey, China is anticipated to ease lending standards on Tuesday for the first time in ten months as a result of recent economic data showing that the factory and retail sectors are failing to maintain the pace they had earlier this year.

In light of fears that the post-COVID recovery is stalling, some major banks have lowered their 2023 GDP growth projections, and the Chinese government convened last week to explore policies to boost economic development.

The sentiment was hampered by skepticism over Chinese stimulus efforts. With the United States closed, the markets also lacked direction, which reduced liquidity.

Two European Central Bank members made an argument for additional rate increases on Monday in light of the possibility of increased inflation. Additionally, markets watch for hints about future interest rates in the testimony of U.S. Federal Reserve Chair Jerome Powell later this week.

Higher rates can decrease spending motivation and lower oil consumption.

In spite of American sanctions, Iran’s crude exports and oil production reached new highs in 2023.

This month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Moscow itself, are expected to cut back on their seaborne exports of gasoline and diesel, while Russia is expected to increase those exports.

From an earlier expectation of $90 per barrel, the bank reduced its average estimate for the price of Brent to $81 per barrel this year.

Even if they are extended to 2024, the OPEC+ cuts won’t be adequate to balance the world’s supply and demand, according to the analysts.

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