Forexpros – Crude oil futures inched up in Asian trading Monday, extending Friday’s gains on news China’s gross domestic product grew 7.6% in the second quarter of this year, in line with expectations though still sluggish, which sparked talk of Chinese credit easing.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD87.61 a barrel on Monday, up 0.12%, off from a session high of USD87.74 and up from an earlier session low of USD87.53.
China’s 7.6% GDP growth rate met expectations, which sparked some relief buying of crude even though the figure fell below the first quarter’s expansion rate of 8.1%.
A cooling Chinese economy would need less fuels and energy to grow, and would normally be bearish for crude, yet the figures sparked talk that China will loosen monetary policy to spur more growth, which sent the commodity gaining.
Weak U.S. consumer sentiment figures sparked talk of credit easing in the U.S., which sent oil making further gains.
In the U.S., the Thomson Reuters/University of Michigan’s preliminary reading on the overall index on consumer sentiment fell to 72.0 in July from 73.2 in June.
Analysts were expecting a 73.4 reading.
The numbers fueled sentiments that the Federal Reserve will stimulate the economy later this year via bond buybacks from banks, a monetary policy tool known as quantitative easing that weakens the dollar to spur the economy.
Oil often rises when the Fed weakens the greenback to jolt the economy since the commodity trades on dollar-denominated exchanges, making it attractively priced in the eyes of investors with other currencies.
On the ICE Futures Exchange, Brent oil futures for September delivery were up 0.15% and trading at USD101.66 a barrel, up USD14.05 from its U.S. counterpart.
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