By: Bloomberg – Oil held steady as investors tracked China’s plans to support its economy, while a prior rally in wider markets ran out of steam.
Benchmark Brent futures were little changed near $77 a barrel, reversing an earlier decline of 1.7%. China last week cut interest rates and hinted that further economic support would be delivered. The world’s two largest economies also said their relations took a positive step forward after US Secretary of State Antony Blinken’s trip to Beijing.
Despite Monday’s lackluster price movement, there have been steady gains for gasoline and diesel as a spate of refinery outages ramp up premiums for the fuels. That’s also helping to boost demand for some Middle Eastern crudes.
Crude trading volumes, especially for West Texas Intermediate, may be lower than usual on Monday as the US marks the Juneteenth holiday.
Oil has retreated in the first half of the year as China’s recovery from Covid Zero missed lofty expectations, while global supplies, including from Russia, remained abundant. In a bid to stem the slide, the Organization of Petroleum Exporting Countries and its allies have announced production cuts, including a voluntary reduction from Saudi Arabia of 1 million barrels a day in July.
“We are back to focusing on Russian oil supply and the slowing of the Chinese economy,” said Arne Lohmann Rasmussen, head of research at Global Risk Management. “There is a growing risk that the $75 floor will not hold, and that the rise in Brent above $76 last week was due to short-covering.”
Russian refineries raised crude processing volumes to the highest level in nine weeks as the nation’s maintenance seasons nears an end. The figure was up almost 194,000 barrels a day on a week earlier.
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