Crude oil prices are rising sharply Friday morning, extending previous session’s gains, as the Chinese central bank cut its key interest rates for the first time since 2012.
The People’s Bank of China today cut its key lending and deposit rates by 0.4 percent and 0.25 percent to 5.6 percent and 2.75 percent, respectively, to revive the sagging economy.
Yesterday’s encouraging U.S. economic data and signs off additional stimulus from the European Central Bank are also contributing to oil’s rise.
Speaking at the Frankfurt European Banking Congress, ECB President Mario Draghi said the central bank will expand its asset purchase program if inflation fails to show signs of returning to the targeted level.
Meanwhile, traders are looking ahead to the OPEC meeting, scheduled for November 27. Though a reduction in OPEC crude output is likely, a few members including Saudi Arabia have indicated that they would rather keep production high and cut prices than reduce output.
Crude oil futures for January are up $1.65 or 2.17 percent at $77.50, coming further off a four-year low of $73.22, recorded on November 14.
On Thursday, crude oil futures ended up $1.35 or 1.8 percent at $75.85 a barrel.
Some upbeat U.S. economic data, including a report from the Reserve Bank of Philadelphia that showed manufacturing activity in that region to have jumped to its highest levels in twenty year in November aided oil’s surge.
The Conference Board’s leading U.S. economic indicators rose more than anticipated in October and a report from the Labor Department showed U.S. consumer prices were unchanged in October.
Initial jobless claims were down by 2,000 last week, although the margin of decline was less than what economists had forecast.
Worries about Chinese economy with a reading on the country’s manufacturing activity in November coming in with a score of and data showing eurozone private sector growth to have unexpectedly slowed down to a sixteen-month low weighed on oil a bit early on in the session.
Meanwhile, natural gas for January is down $0.134 or 2.97 percent at $4.356 per million btu.
The material has been provided by InstaForex Company – www.instaforex.com