The FINANCIAL — Oil prices were up slightly on September 9, nudged higher by comments from Chinese officials that raised hopes of more economic stimulus from the world’s second-biggest economy and led financial exchanges higher around the globe, according to Nasdaq.
Market participants have been fixated on China in recent months as worries about an economic slowdown there spilled over into crude and other commodities.
But on September 9, markets got a boost after China’sMinistry of Finance said that it would roll out a “more forceful” fiscal policy to stimulate economic growth, such as allocating more funds for infrastructure projects and tax cuts for small businesses.
Global financial markets rose, with the pan-European Stoxx 600 climbing 1.8%. Japanese stocks posted their biggest daily gains since 2008 in percentage terms, rising 7.7%.
Risk-on trades appear to be returning after the comments out of China, said Michael Poulsen, oil analyst at Global Risk Management. But, “markets are still looking for direction with continued high supply and outlook for seasonal demand decline” at the end of driving season, he said.
Brent crude, the global oil benchmark, rose 0.2% to $49.76 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.1% at $45.99 a barrel.
Oil prices are still down 13% so far this year, as the combination of ample supply and tepid demand shows few signs of abating.
“Any lasting price recovery would require signs that the oversupply is being reduced,” analysts at Commerzbank said in a report.
One of the major reasons for the oil surplus–U.S. oil production–will be in the spotlight later in the day as the U.S. Energy Information Administration revises its forecast for domestic output. Investors are also bracing for the latest U.S. oil stockpile numbers due later Wednesday from the American Petroleum Institute, an industry group, and on Thursday from the U.S. Energy Department.
After last week’s big builds in crude oil stocks, the consensus this week is for a smaller increase and more volatility should be expected around the reports, Mr. Poulsen said.
Nymex reformulated gasoline blendstock–the benchmark gasoline contract—rose 0.3% to $1.41 a gallon. ICE gas oil changed hands at $486.50 a metric ton, up $1 from the previous settlement.
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