Oil prices were mixed on Tuesday ahead of a decision on lending benchmarks by China, with the world’s second-largest economy widely expected to cut key rates to shore up a slowing recovery.
Brent crude was 3 cents higher at $76.12 a barrel at 0041 GMT. U.S. West Texas Intermediate (WTI) crude was unchanged at $71.29 and there was no settlement on Monday due to a public holiday in the United States.
The WTI crude contract due on July 20 was down 58 cents to $71.35 per barrel.
China is widely expected to cut key lending benchmarks on Tuesday in the first such easing in 10 months, a Reuters survey showed, after recent economic data showed the retail and factory sectors struggling to sustain the momentum seen earlier this year.
The Chinese government met last week to discuss measures to spur growth in the economy, and several major banks have cut their 2023 economic growth forecasts amid concerns a post-COVID recovery is faltering.
“Scepticism over Chinese stimulus measures weighed on sentiment,” ANZ Research said in a client note on Tuesday. “Markets also lacked direction with the U.S. closed, driving liquidity lower.”
On Monday, two policymakers at the European Central Bank argued for more rate hikes as amid risks of higher inflation. Markets also await a testimony from U.S. Federal Reserve Chair Jerome Powell later in the week for future rate clues. Higher rates reduce appetite for spending and can drive oil demand down.
On the supply side, Iran’s crude exports and oil output have hit new highs in 2023 despite U.S. sanctions.
Russia is set to increase seaborne diesel and gasoil exports this month, outweighing cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Moscow itself.
“Supply has rebounded and surprised to the upside from a number of sources: U.S., other non-OPEC, not to mention within OPEC+ e.g. Nigeria, Iran, Venezuela,” JPMorgan analysts said in a note.
The bank cut its average estimate for the price of Brent to $81 per barrel this year from an earlier $90 a barrel forecast.
The OPEC+ cuts are not enough to bring global supply and demand in balance even if they are extended to 2024, the analysts said.