Investing.com – If it’s not the stock market that’s yanking oil around these days, then it’s China.
Crude futures were up more than 2% in New York trading on Tuesday, recovering all of Monday’s losses, as China signaled more stimulus measures to offset some of the impact of its trade war with United States that has taken a heavy toll on its economy.
U.S. crude was up $1.44, or 2.8%, at $51.95 per barrel by 10:47 AM ET (15:47 GMT). It settled 2% down in the previous session after a slide in U.S. equities and data showing Chinese exports falling by their most in two years in December.
London-traded crude, the global oil benchmark, rose by $1.26, or 2.1%, to $60.25, after a decline of nearly 2.5% on Monday.
“Yesterday, the day started with global fears about China given the deterioration of its trade balance,” Zug, Switzerland-based oil consultancy Petromatrix said in a note. “Today the day starts with global optimism about China as it announces tax breaks to stimulate its economy.”
Crude prices began 2019 with the same steady upswing since Christmas before getting tied again to equities, which was the driver for oil through most of the fourth quarter.
New York-based consultancy Energy Intelligence cautioned that instead of the predictable prices or slow, linear changes of the past, oil companies now faced the prospect of “ongoing gyrations in shorter, faster cycles — a reality that will force them to remain conservative in spending and treat each price recovery as a welcome, but likely temporary, relief.”
Wall Street’s rose on Tuesday, but not before a slow start on poor results from JPMorgan Chase (NYSE:).
But oil prices retained the strength shown in Asian and Europe trading after the assurance by Beijing’s National Development and Reform Commission (NDRC) that it expects “a good start” in the first quarter.
Some analysts believe that under the Chinese stimulus measures there could be as much as 2 trillion yuan ($296.21 billion) worth of cuts in federal taxes and fees and local governments could issue another 2 trillion yuan in special bonds to fund key projects.
The China factor aside, oil traders cited upcoming weekly dataset on petroleum supply-demand from the U.S. Energy Information Administration on Wednesday as a factor for the rebound. The EIA is expected to announce a sixth-straight weekly decline in U.S. for the week ended Jan. 11, with analysts forecasting a drop of 1.5 million barrels versus 1.7 million the previous week.
Traders are also on the lookout for the EIA’s Short-Term Energy Outlook, due after 12:00 PM ET (17:00 GMT).
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Source: Investing.com
