As military tensions escalated in the Middle East, the price of West Texas Intermediate (WTI) crude oil surged in the New York oil market. After a significant drop last week, bargain hunters jumped in, and China’s recent interest rate cut added momentum to the increase.
On the New York Mercantile Exchange, the WTI for November delivery closed at $70.56 per barrel, up $1.34 (1.94%) from the previous day. This marked a rebound from a dip below $70 the last day, the first time it had fallen below that level since the 1st of the month. Similarly, Brent crude for December delivery also rose by $1.23 (1.68%) to close at $74.29 per barrel, recovering the $74 level after two trading days.
The Middle East situation has grown more volatile following a recent drone attack on the Israeli Prime Minister’s residence, escalating tensions between Israel and Iran. Any hopes for a ceasefire negotiation disappeared following the death of Hamas leader Yahya Sinwar. This led to significant declines in WTI and Brent prices last week, with WTI dropping 8.39% and Brent falling by 7.57%.
On the same day, China’s central bank, the People’s Bank of China, lowered the Loan Prime Rate (LPR) by 25 basis points. The one-year LPR adjusted to 3.10%, while the five-year LPR fell to 3.60%. This decision followed the PBOC governor’s forecast that the rate cut would be in the range of 20 to 25 basis points.
David Morrison, a senior market analyst at TradeNation, noted that China’s recent rate cut is a positive signal for the world’s largest oil importer, offering some monetary stimulus. However, he pointed out that expectations for the fiscal stimulus promised by Chinese authorities remain insufficient.
Meanwhile, Saudi Aramco’s CEO, Amin Nasser, expressed optimism about China’s oil demand at the Singapore Energy Conference, citing a surge in jet fuel and naphtha driven by the country’s rising chemical needs.
Most Commented