Brent sheds some earlier gains after China disappointment

The front-month ICE Brent contract has shed $0.66/bbl on the day, to $75.98/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent has drawn some support from the OPEC+ production cuts that have come into effect since May, and from recent data from the Joint Organizations Data Initiative (JODI) indicating Saudi Arabia's crude exports were at a five-month low in April.

“Oil received support from reports by JODI that Saudi oil exports hit a five-month low against reports of reductions in exports from the UAE as well,” said Price Futures Group’s senior analyst Phil Flynn.

The oil market now awaits potentially hawkish comments from the US Federal Reserve (Fed) later today to balance out worries about China’s post-Covid economic recovery and global oil demand growth.

Two Fed policymakers told Reuters on Tuesday that they are only focusing on bringing down inflationary pressure. The Fed’s efforts to tame high inflation could help the US to revive its economy and boost oil demand in the largest economy in the world.

Downward pressure:

Brent has seen some downward pressure from below-expectation cuts in China’s key lending rates, said OANDA’s market analyst Ed Moya.

“Oil seems locked in on anything and everything that has to do with China. ​Last week, oil was supported by improving Chinese refiner quotas. ​This week, energy traders are seeing oil weakness emerge on disappointing stimulus efforts,” he added.

In an attempt to improve China’s post-Covid economic recovery, the country has cut its benchmark loan prime rates (LPR) for the first time in 10 months.

“The only reason why I think prices (oil) are not climbing (steadily) yet is because the data from China is still unclear,” commented Rystad's energy research director Claudio Galimberti.

By Aparupa Mazumder 

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