By Grant Smith
“Oil appears to have finally shaken off its bearish malaise,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Investors cheered a salvo of stimulus measures from China’s central bank aimed at mitigating the economic impact.”
Brent for April settlement rose 2 cents to $57.34 a barrel on the London-based ICE Futures Europe exchange as of 3 p.m. local time. West Texas Intermediate for March delivery increased 5 cents to $52.10 a barrel on the New York Mercantile Exchange, after last week gaining by the most since December.
China on Monday offered more funding to banks and cut the interest rate it charges for the money. Singapore has also promised a “strong” package of budget measures and central banks in the Philippines, Thailand and Malaysia have cut interest rates as Asian economies grapple with the virus-induced slowdown.
That’s offsetting any disappointment from OPEC and its partners apparently dropping plans for an emergency meeting to respond to the crisis. Russia, a pivotal member of the alliance known as OPEC+, has so far resisted a push by Saudi Arabia to launch fresh production cuts in response to the loss of demand.
Traders are now likely to focus on whether the coalition announces new cutbacks at its scheduled meeting on March 5 and 6. A technical committee recommended earlier this month that the group reduce supply by a further 600,000 barrels a day, on top of current curbs.
Concerns over the impact of the virus remain strong with Hubei, the Chinese province at the epicenter of the outbreak, reporting new cases and additional deaths. This is seeping into the oil market with the International Energy Agency forecasting global oil demand will decline this quarter for the first time in more than a decade. Goldman Sachs Group Inc. slashed its 2020 crude-consumption forecast almost in half and lowered its first-quarter price estimate by $10 a barrel.
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