NYMEX Crude Oil up 1.6% on Surprise Chinese Rate Cut

By MidnightTrader.com Staff,

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Crude oil prices were stronger this morning on the unexpected news that China cut interest rates for the first time since the depths of the financial crisis.

July crude futures on the NYMEX were up $1.43, or 1.6%, at $86.45. Brent crude is maintaining triple digits, last quoted up $1.23, or 1.22%, at $101.87.

The energy sector is expected to open higher in reaction; Suncor Energy, for instance, is up 0.32, or 1.1%, at $28.80 in the U.S. pre-market.

The aggressive step by China has provided optimism that global growth won't slow down as much as some had feared.

Also providing support was the latest U.S. crude inventory report, released Wednesday, which saw stocks decline after 10 straight weeks of increases -- albeit at a smaller pace than expected.

Also bullish for crude is lingering worries about supply disruption from the Middle East over Iran's nuclear program.

Goldman Sachs, in a new research report, noted that the global oil market has been tightening up.

"The market has shifted from surplus to balanced on a seasonally adjusted basis, and we expect the oil market will move into a seasonally adjusted deficit as sanctions go into effect and world oil demand begins its seasonal rise, drawing inventory and requiring higher prices," Goldman Sachs said in a research note.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Commodities
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