Crude Prices rebounded from to near their highest levels of the year this year on an unexpected monetary stimulus by the People’s bank of China and speculation that US stockpile growth was slowing.
Oilfield Services provide Genscape Inc reported told its clients that inventories in Cushing, Okla., an important storage and delivery point for the Nymex contract, rose by less than 500,000 barrels last week.
This is a smaller increase than has been typical in recent months and adds onto the speculation that inventory growth in the US had reached a plateau and was starting to slow down.
Analysts are however warning that data showing an increase in output by Saudi Arabia would dilute the effects of a slowdown in American inventory growth.
“We worry about the market’s fixation on the U.S.,” Morgan Stanley told Yahoo News.
“Saudi Arabia alone added the equivalent of half of Bakken (the largest U.S. shale oilfield) production in a matter of months – far beyond any U.S. slowdown.”
Light sweet crude for May delivery most recently advanced 89 cents or 0.6% to $56.63 a barrel on the New York Mercantile Exchange. The US benchmark is now close to its highest levels for the year despite slipping 1.7% on Friday.
Brent Futures, the global benchmark, rose 52 cents or 0.6% on the London-Based ICE Futures Exchange to $63.97 a barrel on the announcement by the Central Bank in China to reduce its reserve requirement by one percentage point.
The move came after government data showed that the economy of the world’s second largest economy slowed down to 7% on year on year basis, the slowest in more than 5 years.
“China made a big move, aggressively cutting interest rates which will increase their demand for oil,” said Phil Flynn, senior market analyst at Price Futures Group, told Market Watch.
“Still, the China seemingly contradictory moves may be a signal of larger problems in the Chinese economy and banking system,” Flynn said. “That may limit some upward momentum” for oil.
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