ANN/THE STAR – Oil prices edged higher yesterday as China unexpectedly cut key policy rates for the second time in three months to shore up a sputtering economic recovery, but sluggish economic data from the country put a lid on gains.
Brent crude futures rose USD0.11, or 0.1 per cent, to trade at USD86.32 per barrel at 0414 GMT. United States (US) West Texas Intermediate crude was up USD0.07 cents, also 0.1 per cent, to USD82.57 a barrel.
Prices turned higher after the People’s Bank of China (PBOC) lowered the rate on CNY401 billion (USD55.25 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 15 basis points to 2.5 per cent from 2.65 per cent.
Despite the weak macroeconomic data, China’s oil appetite showed resilience. The country’s refinery throughput in July rose 17.4 per cent from a year earlier, as refiners kept output elevated to meet demand for domestic summer travel and to cash in on high regional profit margins by exporting fuel.
Also lending support to oil prices, Japan’s economy grew much faster than expected in April to June, as brisk auto exports and tourist arrivals helped offset the drag from a slowing post-COVID consumer recovery.
Meanwhile, oil and natural gas output from top US shale-producing regions is set to fall in September for the second straight month to the lowest levels since May, Energy Information Administration data showed on Monday.
The declining US output could exacerbate the global oil supply tightness as the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are cutting production.
