Oil prices rose to their highest level in 10 months on Friday, after China cut banks’ cash reserve requirements to boost its economic recovery, and on expectations that major global interest rate hike cycles were nearing their end.
Brent crude rose 46 cents, or 0.5%, to $94.16 as of 0027 GMT, while the US West Texas Intermediate crude CLc1 was up 0.6% at $90.74. Both the benchmarks were trading at their highest levels since November.
Analyst Tina Teng at CMC markets said China’s reserve requirement cuts were instrumental in lifting energy and industrial metal prices in general, adding that Chinese industrial output and retail sales data could be market movers later on Friday.
Persistent worries about supply, and expectations of the US central bank holding rates after Europe hinted its Thursday hike would be its last, have put oil prices on track to finish higher for a third straight week.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand.
“Betting on oil is becoming a favorite trade on Wall Street. No one is doubting the OPEC+ (oil-producing nations) decision at the end of last month will keep the oil market very tight in the fourth quarter,” said analyst Edward Moya at OANDA.
The International Energy Agency said this week it expects Saudi Arabia’s and Russia’s extended oil output cuts to result in a market deficit through the fourth quarter.
