By Adedapo Adesanya
Oil prices climbed about 2 per cent on Tuesday spurred by China, the world’s top crude importer, reportedly preparing monetary stimulus.
Brent futures rose by $1.27 or 1.7 per cent to settle at $75.17 a barrel and the US West Texas Intermediate (WTI) crude increased by $1.19 or 1.7 per cent to trade at $71.56.
China’s central bank unveiled its biggest stimulus since the COVID-19 pandemic, which was to pull the economy out of its deflationary funk and back towards the government’s growth target.
The package offers more funding and interest rate cuts in the latest attempt by Chinese policymakers to restore confidence in the world’s second-largest economy after recent disappointing data, which affected the market.
The market also gained support amid concerns that growing conflict in the Middle East could hit regional supply.
An Israeli airstrike in Lebanon killed a senior Hezbollah commander as cross-border rocket attacks by both sides increased fears of a full-fledged war in the region.
The strikes risk pulling Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), closer to a conflict with Israel as Iran supports the Lebanese militant group.
Worries about hurricanes threatening the US Gulf Coast would likely miss most offshore oil and natural gas producing regions and hit Florida waned during the session.
The region accounts for 15 per cent of the country’s oil and 2 per cent of natural gas production.
Despite this, several energy firms paused some production but some firms, like Shell started restoring oil production as the storm forecasts shifted away from their offshore platforms.
Crude oil inventories in the US fell by 4.339 million barrels for the week ending September 20, according to the American Petroleum Institute (API). Compared to the week prior, the API reported a 1.96-million-barrel increase in crude inventories.
So far this year, crude oil inventories are 15 million barrels under where they were at the start of the year, according to API data.
Official data from the US Energy Information Administration (EIA) is due later on Wednesday.