Oil futures moved lower Tuesday, failing to hold modest gains scored after China delivered an interest-rate cut amid concerns over the demand picture from the world’s second-largest crude importer.
U.S. traders were returning from a three-day weekend after markets were closed Monday for the Junteenth holiday.
Price action
-
West Texas Intermediate crude for July delivery
CL.1,
-2.19% CLN23,
-2.19%
fell $1.77, or 2.5%, to $70.01 a barrel on the New York Mercantile Exchange. August WTI
CL00,
-2.21% CLQ23,
-2.21% ,
the most actively traded contract, was down $1.55, or 2.2%, at $70.38 a barrel. WTI futures didn’t settle Monday due to the holiday. -
August Brent crude
BRN00,
-1.35% BRNQ23,
-1.35% ,
the global benchmark, declined 94 cents, or 1.2%, to $75.15 a barrel on ICE Futures Europe. -
Back on Nymex, July gasoline
RBN23,
-3.37%
dropped 3.1% to $2.596 a gallon, while July heating oil
HON23,
-4.05%
was down 3.2% at 2.469 a gallon. -
Juy natural gas
NGN23,
-3.08%
ticked p 0.2% to $2.637 per million British thermal units.
Market drivers
The People’s Bank of China on Tuesday cut both its short- and long-term benchmark lending rates by 10 basis points Tuesday, in an effort to support the nation’s slowing economic recovery. The move came after the PBOC last week reduced two key policy rates by 10 basis points each.
Crude prices rose last week, following back-to-back weekly declines, after finding support in Thursday’s session when The Wall Street Journal reported that Chinese authorities were preparing a range of aggressive economic stimulus measures.
Disappointment in China’s economic recovery after the lifting of COVID curbs has dogged the oil market in 2023, with WTI and Brent both down more than 20% for the year to date. Skeptics question whether the efforts Tuesday will provide a meaningful lift.
“Oil prices are a bit rangy to start the week and seemingly moved into short-term Tug of War mode as China’s economic headwinds clash with increased PBOC policy support,” said Stephen Innes, managing partner at SPI Asset Management, in a note.
“But before confidently pushing the oil market higher from here, you would ideally like to see a convincing fall in U.S. storage this week,” he wrote.
