NEW YORK: Oil extended gains near US$69 (RM280) a barrel as US industry data showed a decline in crude as well as fuel stockpiles, and investor optimism grew after China unveiled stimulus measures that are likely to boost demand for commodities.
Futures in New York rose as much as 0.5%, following a 0.9% advance on Tuesday. US inventories of crude, gasoline, and distillates fell last week, along with supplies at the key storage hub of Cushing, Oklahoma, the American Petroleum Institute was said to report. Meanwhile, China announced a package of policies to spur domestic growth in the face of rising trade frictions with the US.
Crude has been struggling to regain the highs of June as an intensifying trade spat between the US and China, the world’s largest oil importer, threatened to hurt energy demand. Investors are also gauging the extent to which renewed US sanctions on Iran may reduce global supplies even as a pledge by the Organization of Petroleum Exporting Countries to increase production has weighed on prices.
“A larger draw than, say, 4 million barrels could see further gains for oil,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney, referring to a government report due later in the day, which is forecast to show that crude stockpiles fell 3 million last week. “The increased spending on infrastructure in China changes the balance for a number of industrial commodities, among them oil.”
West Texas Intermediate crude for September delivery rose as much as 37 cents (RM1.50) to US$68.89 (RM279.53) a barrel on the New York Mercantile Exchange. The contract climbed 63 cents (RM2.56) to US$68.52 (RM278.03) on Tuesday. Total volume traded was about 53% below the 100-day average.
Brent for September settlement added 57 cents (RM2.31) to US$74.01 (RM300.31) on the London-based ICE Futures Europe exchange. The contract settled 0.5% higher on Tuesday. The global benchmark crude traded at a US$5.23 (RM21.22) premium to WTI.
Futures for September delivery gained 1.6% to 502.70 yuan (RM300.78) a barrel on the Shanghai International Energy Exchange, after rising 0.9% on Tuesday.
The API was said to report nationwide crude stockpiles dropped 3.16 million barrels and inventories at Cushing fell by 808,000 barrels last week, smaller than the 900,000-barrel decline that analysts predict the government data on Wednesday will show. If the drop is confirmed by the Energy Information Administration’s report, it would be a 10th consecutive weekly decrease.
In China, financial markets are rediscovering an appetite for risk not seen in months, taking cues from the government’s most notable push yet to invigorate this year’s slowing economy. Its plans for greater fiscal spending and softer regulatory measures are easing concerns over simmering trade tensions between the world’s two largest economies, which had finance ministers and central bankers from the Group of 20 nations warn risks including structurally weak growth.
While Asia’s largest economy grew at its slowest pace since 2016 in the second quarter, economists surveyed by Bloomberg predicted that its economic expansion will maintain its expected course this year at 6.6%, slightly higher than the outlook for the previous month, despite escalating trade war with the US.