Oil rises due to firm yuan, expectations of more Opec cuts
LONDON: Oil jumped more than $1 a barrel on Thursday due to expectations that falling prices may lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation of Us-china trade tensions.
Brent crude had rebounded to $57.57, up $1.34 or 2.4 per cent, by 0844 GMT. US West Texas Intermediate (WTI) crude futures jumped $1.49, or 2.9 per cent, to $52.58 a barrel.
China’s yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite US trade pressure.
“Brent and WTI were rebounding on the combination of a stronger-than-expected official fix in the yuan, alleviating currency war fears,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
Reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in oil prices might also have supported the market, he said.
Both crude contracts fell to their lowest since January on Wednesday after the US Energy Information Administration said US crude stockpiles rose last week after nearly two months of decline as imports jumped to their highest since January.
Emily Ashford, executive director of energy research at Standard Chartered, said she would not read too much into a “short-term rise” on Thursday as it could be a correction to a sell-off that was “a little too extreme”.
“We believe the oil market is starting to price in the fear of a severe and multi-year breakdown in Us-china economic relations,” she said. Standard Chartered has lowered its 2019 Brent forecast to $66 per barrel from $74 previously, and its WTI forecast to $57 per barrel from $66.