WTI extends gains to near $79.70 after PBoC keeps interest rates steady
■WTI Oil price snaps its three-day winning streak on Monday.
■Oil prices depreciated possibly due to the hawkish remarks from the Fed officials.
■Crude prices may strengthen due to the optimism for increased demand from the US and China.
West Texas Intermediate (WTI) Oil price continues to gain ground after an interest rate decision from China, trading around $79.70 per barrel during the Asian session on Monday. However, crude Oil prices struggled during the early hours, which could be attributed to the hawkish remarks made by Federal Reserve (Fed) officials last week. Furthermore, Fed members Bostic, Barr, Waller, Jefferson, and Mester are scheduled to speak on Monday.
On Friday, Federal Reserve Board of Governors member Michelle Bowman made headlines by noting that the progress on inflation might not be as steady as many had hoped. Bowman indicated that the decline in inflation observed in the latter half of last year was temporary and that there has been no further progress on inflation this year.
Last week, WTI Oil price rose by around 2%, driven by optimism for increased demand from the United States (US), the world's largest oil consumer. April data indicated that US consumer inflation had slowed to 0.3%, raising expectations for potential Federal Reserve rate reductions in 2024. Such rate cuts could stimulate economic growth and energy demand. Additionally, lower US interest rates could weaken the US Dollar (USD), making Oil more affordable for buyer countries using other currencies.
Data from the US Energy Information Administration (EIA) showed that US crude stockpiles fell by 2.508 million barrels for the week ending on May 10, marking the second consecutive week of decline and surpassing the expected decline of 1.350 million barrels.
In China, industrial output increased by 6.7% year-on-year in April, indicating a robust recovery in its manufacturing sector and suggesting potential for stronger future demand. Additionally, Reuters reported that on Friday, China announced "historic" measures to stabilize its crisis-hit property sector. The central bank is providing 1 trillion yuan ($138 billion) in additional funding and easing mortgage rules. Additionally, local governments are set to purchase "some" apartments to support the sector.
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