Crude oil prices rose on expectations of a further decline in U.S. crude inventories. China Evergrande Group (3333.HK), which had fallen sharply on investor concerns about a default, spread concern about future oil demand.
Oil prices rose after falling more than 2% Monday on concerns about a financial crisis in China. China’s Evergrande Group has liabilities of about $300 billion and is on the verge of a bond default. Shares traded on the Hong Kong Stock Exchange have already lost 85% of their value since the start of the year.
Analysts have warned that the Evergrande debt default could trigger a financial crisis that weighs on the global economic recovery. China’s central bank has already responded with a liquidity boost, pumping 120 billion yuan into the financial system. The Chinese government will take measures to maintain financial stability.
WTI crude futures rose 0.4%, or 27 cents, to close at $70.56 a barrel.
Brent crude futures rose 0.6%, or 44 cents, to $74.36 a barrel.
Crude oil futures were boosted by expectations that U.S. crude oil inventories will fall for the seventh week in a row. This indicates that fuel demand in the US is increasing. Crude oil inventories are expected to fall by 3.8 million barrels this week, according to figures released today by the U.S. Energy Information Administration (EIA).
In addition, the depreciation of the dollar remains the main driver of oil prices. The dollar movement index weakened by 0.08% to 93.2047 against the six major currencies in the basket. This makes oil prices paid in dollars cheaper for holders of other currencies.
Meanwhile, about 17% of oil production in the Gulf of Mexico is recovering from the effects of Hurricane Ida.
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Wednesday, September 22, 2021