Oil rises as China seeks to soothe economic woes
(Reuters) - Oil prices rose more than 1% on Thursday after China's central bank sought to stem the rising tide of pessimism over the country's property market and wider economy.
Prices fell in the previous session on simmering worries over the impact on fuel demand from a deepening property crisis that is stifling momentum in China's economy and from the potential for further increases to U.S. interest rates.
Brent crude futures rose $1.08 to $84.53 a barrel by 1313 GMT and U.S. West Texas Intermediate crude (WTI) was up $1.18 at $80.56 a barrel.
After falling nearly six dollars, it was only a matter of time before crude prices found support, said OANDA analyst Edward Moya.
Prices are rebounding on expectations that Chinese officials will deliver meaningful stimulus and that the oil market will remain tight, analysts suggested.
"Oil traders like the fact that China isn’t going to tolerate weakness in economic activity," said Naeem Aslam at Zaye Capital Markets after China's central bank said it would keep its policy "precise and forceful" to support the country's economic recovery.
U.S. interest rates remain in focus, with minutes of the Federal Reserve's July meeting on Wednesday that showed officials did not give strong indications about pausing rate hikes in an effort to prioritize the battle against inflation.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand.
On a more bullish note, China made a rare draw on crude oil inventories in July, the first time in 33 months that it has dipped into storage.
Data released on Wednesday showed that U.S. crude oil inventories fell by nearly 6 million barrels last week on strong exports and refining run rates.
If the market had received that data in friendlier macroeconomic climes, the narrative of a tightening market would be at the top of news screens rather than today's blight of financial considerations, said John Evans at oil broker PVM.
Oil looks like it will find a home around the $80 level as too many risks to the macroeconomic outlook remain on the table, OANDA's Moya added.
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