Brent back above $80 after China rate cut
NEW YORK: Oil jumped for a second straight day yesterday, with benchmark Brent crude returning above the $80 level after slipping below it last week, as top petroleum buyer China cut interest rates and speculation mounted that Opec will cut output.
Higher heating oil prices on concerns over unseasonably cold weather across America also supported the oil complex, traders said.
Brent’s front-month was up 80 cents at $80.13 a barrel by 10.45am EST (1545 GMT), after earlier rising $2.28 to a session high of $81.61. Front-month US crude traded 45 cents higher at $76.30, after an intraday peak of $77.83.
China’s central bank cut its benchmark interest rates for the first time in more than two years on Friday to reduce borrowing costs and support an economy on track for its slowest annual growth in 24 years.
China is the largest net importer of petroleum and metals, and the rate cut was viewed positively across commodity markets, many of which have tumbled along with oil over the past five months.
Traders expecting an output cut from the Opec at its November 27 meeting added to the rally.
“This market has been sold out so much that any kind of fresh bullish news is going to cause a price pop, although I’m not sure if the China rate hike alone or more speculation about OPEC without confirmation will sustain this,” said Thomas Saal, analyst at INTL FC Stone in Miami, Florida.
Reuters
