Oil prices advanced on Monday as optimism over China’s latest consumption stimulus measures bolstered market sentiment.
By 3:40 pm AEDT (4:40 am GMT) Brent crude futures added $0.54 or 0.8% to US$71.12 per barrel, while U.S. West Texas Intermediate (WTI) crude gained $0.51 or 0.8% to $67.69 per barrel.
China’s State Council announced a range of initiatives on Sunday, including policies aimed at increasing household income and introducing a childcare subsidy scheme to encourage consumer spending in the world’s second-largest economy.
Meanwhile, investors are bracing for a pivotal week with multiple central bank meetings, including the U.S. Federal Reserve, which is expected to keep interest rates unchanged when its policy meeting concludes on Wednesday.
ANZ analysts observed that concerns over an oversupply of oil from OPEC had subsided: "Concerns over the prospect of a higher OPEC supply flooding the market also eased. The group’s production hikes will be phased-in over an 18-month period, equating to a rise of only 138kb/d per month. We believe political considerations may have been behind the decision.
“Trump hasn’t been shy in asking OPEC to help keep oil prices lower. Any rise in OPEC supply could also help the U.S. put pressure on Iran and Venezuela.”
