Oil steadies after sharp fall; focus on China growth

A Canadian Natural Resources pump jack pumps oil out of the ground near Dorothy, Alberta, Canada, June 30, 2009. (Reuters)

SULAIMANI (ESTA) — Oil prices bounced on Tuesday, steadying after a sharp fall of 4% in the previous session, as worries over China’s fuel demand were soothed by the central bank’s pledge to support an economy hit by renewed COVID-19 curbs.

Brent crude futures were up 48 cents at $101.8 a barrel at 0817 GMT after rising to $103.93 earlier in the session.

U.S. West Texas Intermediate contracts were up 65 cents at $97.89 per barrel after climbing to $99.82 a barrel in early trade.

Both contracts had settled around 4% lower on Monday, with Brent falling as much as $7 a barrel in the session and WTI dipping roughly $6 a barrel.

China will keep liquidity reasonably ample in financial markets, the People’s Bank of China said in a statement on Tuesday, a day after the central bank announced a cut to banks’ foreign exchange reserve ratio to support the economy, according to Reuters.

“I still expect more policy support, but not the flood-like policy deluge the markets have been hoping for, which could leave oil markets adrift over the short term, looking to the U.S. summer driving season and EU sanctions for support,” Reuters quoted Stephen Innes of SPI Asset Management as saying.

The Beijing city government expanded its COVID-19 mass testing from one district this week to most of the city of nearly 22 million as the population braced for an imminent lockdown similar to Shanghai’s stringent curbs.

On the supply side, analysts said that phasing out of Russian oil from the market would continue to support prices.

“I have reservations that potential European energy sanctions on Russian oil and natural gas can be ignored for long,” OANDA analyst Jeffrey Halley said in a note, Reuters reported.

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