Oil prices edged higher on Monday as China's latest stimulus measures helped to alleviate fuel demand concerns.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.15 per cent higher at $84.61 a barrel at 9.39am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.23 per cent at $80.01 a barrel.
On Friday, Brent settled 1.34 per cent higher at $84.48 a barrel. WTI closed up 0.99 per cent at $79.83 a barrel.
“Oil trading volumes show an unusual fall since July when compared to volumes traded in the past two years. That’s partly due to weakening demand fears and falling gasoline inventories, but also due to tightening oil markets as a result of lower Opec+ supply,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“We know that the demand will advance towards fresh records despite weak Chinese demand.”
China, the world’s second-largest economy and top crude importer, halved the stamp duty on stock transactions on Monday in the latest attempt to boost the country’s struggling market, state news agency Xinhua reported, citing the Finance Ministry.
China's securities regulator has approved the launch of 37 retail funds to help infuse new capital into the market and said it would slow the pace of initial public offerings, according to Reuters.
The Asian country's post-coronavirus economic recovery has lost momentum mainly due to a deepening property slump and weak consumer spending.
Last week, the People's Bank of China announced a moderate cut to its one-year benchmark lending rate, disappointing investors who were expecting more aggressive stimulus measures.
The International Energy Agency expects oil demand to expand by 2.2 million barrels per day this year, with China accounting for 70 per cent of the consumption growth.
US Federal Reserve chairman Jerome Powell has hinted at further interest rate increases to curb inflation.
At the Jackson Hole symposium in Wyoming on Friday, Mr Powell said the Fed would continue to bring inflation down to its 2 per cent target.
The US economy is not cooling as expected, with stronger-than-anticipated gross domestic product growth and “especially robust” consumer spending, he said.
“We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down towards our objective.”
After pausing its tightening cycle in June, the Fed last month increased its policy rate for the 11th time since March 2022, as it aims to bring inflation down to its 2 per cent target range after prices hit a four-decade high in June 2022.
Higher interest rates dampen economic growth, lowering crude demand.
Oil prices have recorded two straight weeks of losses after a seven-week rally amid concerns about China’s economy and rising supply from countries such as Iran and Venezuela.
As tension cools with the US, Iran aims to boost its crude production to 3.4 million bpd by the end of summer, from 3.2 million bpd currently, Oil Minister Javad Owji was quoted as saying by Iranian state news agency Shana last week.
The US is in talks with Caracas to explore a temporary lifting of sanctions in exchange for fair elections next year, Bloomberg reported on Thursday.