Oil futures: Crude rows back from highs as China stimulus boost fades
Quantum Commodity Intelligence – Brent futures Wednesday rowed back from earlier highs of around the $75/b mark, after the initial boost from China's stimulus package ran its course while an escalation in Middle East tensions have been sidelined by oil investors.
Front-month Nov24 ICE Brent futures were trading at $73.51/b (1820 GMT), compared to Tuesday's settle of $75.17/b and the intraday high of $75.35/b.
At the same time Nov24 NYMEX WTI was trading at $69.77/b, versus the day's range of $69.23-$71.72/b and Tuesday's settle of $71.56/b.
China on Tuesday announced its largest stimulus package since the pandemic, initially helping lift the North Sea benchmark above the $75/b mark, although analysts have said the impact may be limited.
"The PBOC's measures go beyond just interest rate cuts. By lowering the reserve ratio, adjusting mortgage terms, and providing liquidity support for stock buybacks, the central bank has signaled its commitment to supporting various parts of the economy," said Saxo Group in a client note.
However, Saxo cautioned: "While these moves are impressive in their scope, they raise several questions about sustainability. What is still needed is execution of the announced measures."
The Middle East had been keeping markets on edge, although so far there has been no direct impact on oil production.
In the latest escalation, Israel said it had killed Ibrahim Qubaisi, the head of Hezbollah's missile systems, in what it described as a targeted attack on the southern suburbs of Beirut.
But Iran has hinted at retaliation against Israel, after Iran's President Masoud Pezeshkian told CNN that its ally Hezbollah "cannot stand alone against a country that is being defended and supported and supplied by Western countries, by European countries and the United States."
Hurricane
Meanwhile, Hurricane Helene is expected to make landfall in Florida as a powerful hurricane this week, although largely avoiding oil and gas fields in the Gulf of Mexico.
However, producers have shut-in 16%, or 284,000 bpd, of oil production and 11%, or 208 million cubic feet per day, of natural gas as precautionary measures.
Oil prices were given an early boost after the latest American Petroleum Institute report revealed a 4.33 million barrel draw in crude stockpiles, along with 3.4 million barrel drop in gasoline inventories.
Benchmarks also briefly rebounded from lows as the EIA reported a similar drawdown of around 4.5 million barrels, while gasoline stocks were also lower.
But broader macro economics continue to drag on the upside for oil, as US consumers remain downbeat on the economy.
"The overall consumer confidence index slipped nearly seven points in September, marking the largest one-month drop in three years," noted Wells Fargo bank in its latest report.
Meanwhile, OPEC has raised its forecasts on global oil demand for the medium and long term in its yearly outlook, led by India, Africa and the Middle East, while it also sees a slower shift to electric vehicles and cleaner fuels.
The producer group sees demand reaching 118.9 bpd by 2045, up nearly 3 million bpd from last year's report, before moving above 120 million bpd by mid-century.
