- The Oil price recovers to near $70.00 after PBoC’s bigger-than-expected cut in its Loan Price Rate.
- Iranian oil and nuclear facilities are expected to remain safe from Israel’s attack.
- Investors await the S&P Global PMI for fresh guidance on the Oil demand outlook.
West Texas Intermediate (WTI), futures on NYMEX, bounces back to near $70.00 in Monday’s European session. The Oil price recovers strongly after a big boost from the People’s Bank of China’s (PBoC) larger-than-projected dovish decision on interest rates.
The PBoC cuts its one-year Loan Prime Rate by 25 basis points (bps) to 3.1%, with an intention to uplift economic growth, boosting spending and revive the realty sector. Additionally, the Chinese central bank cut the five-year LPR from 3.85% to 3.60%. Economists expected the PBoC to reduce its key borrowing rates by 20 bps.
A larger-than-usual PBoC interest rate cut has improved the Oil demand outlook as China is the largest importer of the black gold in the world. The overall action in the Oil price remained bearish in the past week as Beijing didn’t provide clarity on how the massive stimulus by China’s ministry will be allocated.
On the geopolitical front, comments from Israeli Prime Minister Benjamin Netanyahu last week that they will not attack on Iran’s non-military sites, which pointed to safety of Iran’s oil and nuclear facilities, has diminished fears of supply disruption.
Going forward, the Oil price will be influenced by the preliminary S&P Global Purchasing Managers’ Index (PMI) data for October of various nations, which will be published on Thursday.
Brent Crude Oil FAQs
Brent Crude Oil is a type of Crude Oil found in the North Sea that is used as a benchmark for international Oil prices. It is considered ‘light’ and ‘sweet’ because of its high gravity and low sulfur content, making it easier to refine into gasoline and other high-value products. Brent Crude Oil serves as a reference price for approximately two-thirds of the world's internationally traded Oil supplies. Its popularity rests on its availability and stability: the North Sea region has well-established infrastructure for Oil production and transportation, ensuring a reliable and consistent supply.
Like all assets supply and demand are the key drivers of Brent Crude Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of Brent Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of Brent Crude Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact Brent Crude Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to recovery gains above 1.0500 ahead of ECB policy announcements
EUR/USD holds the rebound above 1.0500 in the European session on Thursday amid a broad US Dollar retreat. However, the upside appears capped amid expectations for more ECB rate cuts in 2025. ECB policy announcements and Lagarde's press conference are on tap.
GBP/USD pulls back to 1.2750 as markets turn cautious
GBP/USD is pulling back to near 1.2750 in the European session on Thursday as traders turn cautious. The pair reverses earlier gains even as the US Dollar corrects downwards. The focus remains on the US PPI and Jobless Claims data.
Gold price sits near one-month high on Fed rate cut optimism and softer USD
Gold price seems to have stabilized following good two-way price swings and trades around the $2,720 area during the early European session, just below the highest level in more than a month touched earlier this Thursday.
European Central Bank set to cut interest rates again amid slow economic growth
The European Central Bank is expected to cut benchmark interest rates by 25 bps at the December policy meeting. ECB President Christine Lagarde’s presser will be closely scrutinized for fresh policy cues.
BTC faces setback from Microsoft’s rejection
Bitcoin price hovers around $98,400 on Wednesday after declining 4.47% since Monday. Microsoft shareholders rejected the proposal to add Bitcoin to the company’s balance sheet on Tuesday.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.