Investing.com– Oil prices rose in Asian trade on Monday, recovering some measure of recent losses on hopes of improving economic conditions in top importer China after the country unexpectedly lowered borrowing costs.
Brent oil futures expiring in September rose 0.4% to $82.92 a barrel, while West Texas Intermediate crude futures rose 0.4% to $81.87 a barrel by 21:38 ET (01:38 GMT).
Both contracts were nursing steep losses from last week, having lost over 3% each amid renewed speculation over an Israel-Hamas ceasefire.
China cuts interest rates to boost economy
Sentiment towards China, which is the world’s largest oil importer, improved after the country unexpectedly lowered its benchmark loan prime rates, as it struggles to shore up slowing economic growth.
The cut comes just a week after data showed the Chinese economy grew less than expected in the second quarter, raising concerns over a potential slowdown in the country’s appetite for crude.
Beijing has vowed to unlock more stimulus measures to help shore up growth, with Monday’s cuts coming as part of these promises. But China’s LPR is already at record lows, as the country loosened monetary policy drastically over the past two years to help support growth.
Still, the prospect of increased liquidity in the Chinese economy bodes well for some near-term growth- a trend that could benefit oil demand in the country.
Oil nurses steep losses amid Israel-Hamas ceasefire chatter
Monday’s gains came after oil prices tumbled over 3% in the past week, as media reports suggested that ceasefire talks between Israel and Hamas could resume from as soon as this week.
The reports saw traders attach a smaller risk premium to oil prices, especially on the prospect of fewer supply disruptions in the Middle East.
U.S. officials said that Israel and Hamas were close to brokering a deal which could see some stability in the Gaza strip, and also reduce tensions between Israel and other countries in the Middle East.
Biden drops reelection bid, rate cuts in focus
On the U.S. political front, markets were also digesting President Joe Biden’s decision to no longer seek reelection. Biden endorsed Vice President Kamala Harris, who will run against Republican frontrunner Donald Trump.
CBS polls data from last week showed Trump polling better against both Biden and Harris. The former president has promised to increase U.S. oil production if he wins a second term.
Plans for U.S. interest rate cuts were also in focus, as soft inflation data and dovish signals from the Federal Reserve saw markets positioning for a September rate cut.
