The Brent crude oil benchmark hovered above $80 a barrel on Wednesday, buoyed by China’s pledge to reinvigorate economic growth and expectations that the U.S. Federal Reserve will stop raising interest rates soon.
Brent futures were up 63 cents at $80.26 a barrel by 1325 GMT while U.S. West Texas Intermediate (WTI) crude was up 51 cents at $76.26.
China’s top economic planner pledged on Tuesday to roll out policies to “restore and expand” consumption in the world’s second-largest economy, which could boost oil demand.
In the U.S., a report on Tuesday showed retail sales rose by less than expected in June, boosting expectations that the Federal Reserve will stop raising interest rates.
Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand.
In another positive sign, European Central Bank (ECB) governing council member Klaas Knot on Tuesday suggested that rate hikes beyond its meeting next week were “by no means a certainty”.
Meanwhile, the latest data out of Canada and the United Kingdom showed signs of cooling inflation. “Traders have started to become a lot more optimistic as inflation eases off … any improvement in the inflation data also means an improvement in oil demand,” said Naeem Aslam at Zaye Capital Markets.
On the supply side, data from the American Petroleum Institute (API) showed crude oil, gasoline and distillate inventories all fell last week.
PVM analyst John Evans said one of the main reasons behind the market’s benign opening was the API report, with an expected crude draw of 2.3 million barrels turning into a mere 800,000 barrels.
“Those of us expecting some fireworks … are sorely disappointed as it lands with a bit of a whisper rather than a bang,” he said.
Meanwhile, Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.