Oil prices up ahead of US and European data
Singapore : Oil prices rose slightly in Asian trade today after sharp falls the previous week on oversupply fears, with traders awaiting the release of US and European data.
Analysts said the market was broadly unmoved by news China had cut interest rates for a sixth time in a year on Friday as the world’s number two economy suffers a growth slowdown. “Key economic data from the US on growth in durable goods orders, third quarter GDP and business confidence and unemployment data from the European Union will set the tone for prices this week,” said Sanjeev Gupta, head of the Asia-Pacific Oil & Gas practice at professional services firm EY.
Investors will also keep a close watch on the Federal Reserve’s policy meeting this week for clues about its plans for interest rates, with expectations that it will delay a hike until the new year.
At around 0330 GMT, West Texas Intermediate crude for December delivery was trading 13 cents higher at USD 44.73, while Brent crude for December was up 10 cents at USD 48.09.
On Friday the People’s Bank of China cut interest rates by 0.25 percentage points and lowered the reserve ratio requirement, the amount of cash banks must keep in reserve.
It also abolished its official cap on rates for savers, allowing financial institutions to offer a market-based rate of return for customers.
However, while Asian markets rallied today, analysts were sceptical about the likely impact of the latest easing measures on kickstarting growth.
Last week data showed growth came in at 6.9 per cent year-on-year in July-September, its weakest rate since the 2009 financial crisis. Independent analysts believe the true figure could be lower.
At the weekend, Chinese Premier Li Keqiang hinted that full-year growth could dip below 7.0 per cent, adding that “we never said we must defend any target to the death”.
China is the world’s largest energy consumer and any hint of a slowdown drags oil futures prices down amid a global crude supply glut.
Singapore-based analyst Gupta told AFP that the rate cut and speculation of further stimulus by the European Central Bank “did not help alleviate the market’s short-term concerns about the continuing oversupply in oil”.
Fatih Birol, executive director of the International Energy Agency, told an energy conference in Singapore on Monday that the market will remain “comfortably supplied” until mid-2016.