Following signals from the U.S. Federal Reserve on a possible start to rate cuts, oil prices have gone higher today, Thursday. This is also because of China’s launching of new support measures for its embattled property market.
According to Reuters, CMC Markets analyst Tina Teng, in his speech said, “The immediate reason for an oil rebound is likely the market’s expectations for rate cuts this year after Fed’s Powell indicated ‘a peak of the rate hiking cycle.’
Brent crude futures rose 43 cents, or 0.5%, to $80.98 a barrel and U.S. West Texas Intermediate crude futures gained 44 cents, or 0.6%, to $76.29 at 0405 GMT, after falling by more than $2 a barrel in the previous session.
In the midst of concerns about the fallout from the liquidation of developer Evergrande (3333.HK), opens new tab and as the country ended last year with the worst declines in new home prices in nearly nine years. China, which is the world’s second largest economy, unveiled new property support measures.
Analysts at JPMorgan expected China to remain the largest contributor to the global oil market this year. Envisioning oil demand there would grow by 530,000 barrels per day (bpd) in 2024, following a 1.2 million bpd surge last year.
Tension in the middle East about attacks by Yemen-based Houthi forces on shipping in the Red Sea are now increasing cost and disrupting the oil market.
ANZ Research said in a note, after the Houthi group said it would keep up attacks on U.S. and British warships in the Red Sea in what it called acts of self-defense, “The energy market remains on edge as it waits for a US response to the drone attack on American troops in Jordan.”