Crude oil prices began trade with a gain today as traders turned their attention to U.S. monetary policy and China’s latest move to accelerate growth through stimulus measures.
At the time of writing Brent crude was trading at $72.57 per barrel, with West Texas Intermediate changing hands for $68.98 per barrel.
The climb followed an announcement from Beijing that it would loosen its monetary policy to fuel economic growth although the lack of details on what this loosening would entail exactly limited oil’s gains.
Additional support for oil prices came from Chinese import data, which showed that shipments of crude had inched up in November, for the first time in months. The increase was quite solid, too, at 14% from October to 11.81 million barrels daily.
A U.S. oil inventory build as estimated by the American Petroleum Institute failed to reverse price gains, possibly because of its modest size of half a million barrels.
At the same time, the U.S. Federal Reserve is expected to next week announce a fresh rate cut, which would be bullish for oil prices as reflected in the anticipatory gain today. Before the Fed makes its next rate decision, however, all eyes will be on the latest consumer price index reading, due out at 8:30 am ET today.
Preliminary estimates see the November CPI reading at 2.7%, which would be a slight increase on October’s 2.6%. Core inflation for November is seen at 3.3% on an annual basis—for the fourth month in a row. These figures might make a new rate cut decision a bit problematic but media reports suggest that market players overwhelmingly expect that decision.
“The Fed should be in a position to move forward on the December rate cut, but [the final] CPI report now becomes another significant milestone in the policy-adjustment calculus,” the chief executive of global fixed income at BlackRock, Rick Rieder, said.
Source: By Irina Slav from Oilprice.com