Oil traded near a three-month high as China flagged more measures to boost economic growth, aiding the outlook for energy demand just as the global market shows signs of tightening.
West Texas Intermediate edged higher to around $79 a barrel after rising more than 4% over the previous three sessions. Top leaders in China, the largest crude importer, signaled more support for the real estate sector alongside pledges to boost consumption, although they eschewed major fiscal or monetary loosening.
Oil has pushed higher in the opening weeks of the second half after the Organization of Petroleum Exporting Countries and its allies reduced supplies to help drain global inventories. That’s offset the drag from Federal Reserve Chair Jerome Powell’s campaign of monetary tightening, with another hike expected this week.
“The day of reckoning may be tomorrow, after Powell has spoken,” said Vandana Hari, founder of Vanda Insights in Singapore. “Much of crude’s gains this month have been driven by investor cheer over the Fed potentially ending its rate hikes and guiding the US economy to a soft landing. If Powell disappoints, expect a pullback in risk assets as well as crude.”
Both WTI and global benchmark Brent closed above their 200-day moving averages on Monday for the first time in nearly a year. If sustained, that could help to spur additional buying.
The market’s renewed strength is also manifesting in oil’s key timespreads. The gap between the two nearest contracts for WTI was 36 cents a barrel in backwardation — the highest since November — after briefly dipping into the opposite bearish contango structure last week.
Gasoline was also in focus after Exxon Mobil Corp. shut a unit at one of the largest US refineries. US futures are trading near their highest since October.
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