© Reuters. FILE PHOTO: Drilling rigs are seen during shale oil and gas drilling in Vaca Muerta in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File photo
By Sudarshan Varadhan
SINGAPORE (Reuters) – Oil prices rose to their highest in 10 months on Friday after China cut banks’ cash reserve requirements to boost its economic recovery and on expectations that major global interest rate hike cycles are nearing an end.
rose 46 cents, or 0.5%, to $94.16 as of 0027 GMT, while U.S. West Texas Intermediate crude oil rose 0.6% to $90.74. Both benchmarks were at their highest level since November.
Analyst Tina Teng of CMC Markets said China’s reserve requirement reduction was a key contributor to the rise in energy and industrial metals prices in general, adding that Chinese industrial production and retail sales data could be market-defining later on Friday.
Ongoing worries about supply and expectations that the U.S. Federal Reserve will keep interest rates on hold after Europe indicated Thursday’s rate hike would be its last have put oil prices on track to close higher for a third straight week .
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand.
“Betting on oil is becoming a popular business on Wall Street. No one doubts that the OPEC+ (oil producing nations) decision late last month will keep the oil market very tight in the fourth quarter,” analyst Edward Moya told OANDA.
The International Energy Agency said this week it expects extended oil production cuts by Saudi Arabia and Russia to lead to a market deficit by the fourth quarter. Prices briefly fell due to a declining U.S. inventory report, but soon rose again as supply concerns prevailed.
Source : au.investing.com