OIL

Oil Steadies as New China Briefing Renews Hopes for Stimulus

Oil steadied following the previous session's sharp decline as China plans a Saturday briefing on fiscal policy, with the market also monitoring developments in the Middle East. 

Brent rose toward $78 a barrel after tumbling 4.6% on Tuesday, and West Texas Intermediate traded above $74. China's finance minister will introduce moves to strengthen fiscal policy with the aim of shoring up growth and take questions from reporters, according to a notice from the government.

Oil was swept up in a broader market selloff on Tuesday after China's top economic planner ended a briefing without announcing major fresh stimulus. The slide in prices overshadowed nervousness about an escalation of hostilities in the Middle East, particularly a possible retaliatory strike by Israel on Iran's oil facilities following a missile barrage last week.

President Joe Biden has discouraged Israel from targeting Tehran's oil fields, and Iran has continued exporting crude from its main Kharg Island terminal. Still, markets remain on edge, with options in a bias toward calls — where buyers profit when prices rise — and volatility elevated.

"Heightened geopolitical risks have supported oil prices and appear likely to continue to do so," Morgan Stanley analysts including Martijn Rats and Charlotte Firkins said in a note. "However, the underlying balance has continued to weaken."

The bank raised its Brent price forecast by $5 to $80 a barrel for the fourth quarter of this year on heightened geopolitical risk. Others have also struck a more bullish tone in recent days, with hedge fund manager Pierre Andurand saying crude could surge $10-$15 in the event of an attack, while Carlyle Group's Jeff Currie said oil supply risks are the biggest in decades. 

In the US, the American Petroleum Institute reported crude stockpiles expanded by 11 million barrels last week. However, inventories of gasoline and distillates — a category which includes diesel — declined.

Brent for December settlement advanced 0.6% to $77.68 a barrel at 10:38 a.m. in London.

WTI for November delivery rose 0.7% to $74.10 a barrel.

Source : Bloomberg

 

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