By Adedapo Adesanya
Crude prices climbed higher on Tuesday after China said it would act to support economic growth, with Brent futures growing by $1.13 or 1.4 per cent to $79.63 per barrel and the US West Texas Intermediate (WTI) futures expanding by $1.60 or 2.2 per cent to $75.75 a barrel.
The market had weakened in the previous session after China’s economy grew at a weak pace in the second quarter as demand weakened at home and abroad, with the post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus to shore up activity.
The world’s top oil importer’s gross domestic product (GDP) grew just 0.8 per cent in April-June from the previous quarter on a seasonally adjusted basis, data released by the National Bureau of Statistics showed on Monday.
On a year-on-year basis, GDP expanded 6.3 per cent in the second quarter, accelerating from 4.5 per cent in the first three months of the year, but the rate was well below the forecast for growth of 7.3 per cent.
This has spurred Chinese authorities to sit tight as they face a daunting task in trying to keep the economic recovery on track, and on Tuesday, the country’s National Development and Reform Commission (NDRC) announced plans to roll out policies to “restore and expand” consumption without delay.
The NDRC, which is the country’s top economic planner, said it would promptly formulate and roll out policies to restore and expand consumption. This will be done by focusing on stabilising the bulk commodity consumption, improving automobile and electronics consumption as well as optimising the consumption environment.
It also added that it would introduce a batch of practical and effective policies and improve their implementation as soon as possible, and this pushed oil prices up.
Support also came as expectations the US Federal Reserve will stop raising interest rates soon and a forecast decline in output in the same country.
The US Energy Information Administration (EIA), in its projection, showed that shale oil production would likely decline in August for the first time since December.
Crude oil inventories in the US decreased this week by 797,000 barrels, the American Petroleum Institute (API) data showed on Tuesday after increasing by 3.026 million barrels in the week prior.
The official data from the EIA will drop later on Wednesday.
