LONDON: Oil prices rose more than 1% on Thursday after China’s central bank sought to stem the rising tide of pessimism over the country’s property market and wider economy.
Prices fell in the previous session on simmering worries over the impact on fuel demand from a deepening property crisis that is stifling momentum in China’s economy and from the potential for further increases to U.S. interest rates.
Brent crude futures rose $1.08 to $84.53 a barrel by 1313 GMT and U.S. West Texas Intermediate crude (WTI) was up $1.18 at $80.56 a barrel.
After falling nearly six dollars, it was only a matter of time before crude prices found support, said OANDA analyst Edward Moya.
Prices are rebounding on expectations that Chinese officials will deliver meaningful stimulus and that the oil market will remain tight, analysts suggested.
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“Oil traders like the fact that China isn’t going to tolerate weakness in economic activity,” said Naeem Aslam at Zaye Capital Markets after China’s central bank said it would keep its policy “precise and forceful” to support the country’s economic recovery.
U.S. interest rates remain in focus, with minutes of the Federal Reserve’s July meeting on Wednesday that showed officials did not give strong indications about pausing rate hikes in an effort to prioritise the battle against inflation.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand.
