By Adedapo Adesanya
Oil rebounded by 3 per cent on Tuesday as the market weighed plans by China to support its economy against a possible coronavirus lockdown in its capital Beijing.
Brent crude gained $3.32 or $3.24 per cent to trade at $105.60 per barrel, while the United States West Texas Intermediate (WTI) crude rose $3.64 or 3.69 per cent to $102.2 per barrel.
In China, lockdowns to counter COVID-19 in Shanghai have dragged into their fourth week and orders for mass testing, including in Beijing’s largest shopping district, have prompted fears of other Shanghai-style lockdowns, causing both Brent and WTI to crash around 4 per cent on Monday.
However, recovery came as China’s central bank said on Tuesday it will step up prudent monetary policy support to the nation’s economy and any stimulus would help boost oil demand amid worries about a slowdown in global growth.
The People’s Bank of China made this in response to recent market fluctuations which are mainly driven by investor expectations and sentiment, noting that it has been coordinating COVID-19 control with economic and social development, smoothening logistics as well as industrial and supply chains.
The central bank of the world’s largest oil importer will step up its prudent monetary policy to support the real economy, especially industries, micro, small and medium-sized enterprises, and individual businesses that are badly affected by the epidemic.
Meanwhile, special reloans will be issued in sectors, including sci-tech innovation, elderly care, energy, agriculture and civil aviation, while maintaining reasonably sufficient liquidity in the market, the bank said.
Meanwhile, the market was pressured as the US Dollar also hit a two-year high, making oil more expensive for other currency holders.
On the geopolitical scene, Russian energy giant Gazprom told Poland’s PGNiG it will halt gas supplies along the Yamal pipeline from Wednesday morning, PGNiG said in a statement.
Gazprom said on Tuesday that Poland would need to begin making payments under a new scheme as of Tuesday and this will contribute to stronger diesel prices.
The European Union continued to consider options to cut imports of Russian oil as part of possible further sanctions against the country over its invasion of Ukraine, but nothing has been formally proposed.
In a bearish signal for oil markets, analysts polled estimated that US crude inventories had increased by 2.2 million barrels in the week to April 22.
The official government Energy Information Administration (EIA) data is due on Wednesday.
Modupe Gbadeyanka