Major commodities remained unimpressed by the latest Chinese move to prop up its slowing economic recovery, with crude oil prices rising on Wednesday but returning to losses early on Thursday.
On Tuesday, China cut its key lending rates, for the first time in 10 months. China’s one-year loan prime rate (LPR) and the five-year LPR were both lowered by 10 basis points, as the world’s second-largest economy and top crude oil importer looks to bolster the post-lockdown economy showing signs of slower growth this quarter.
However, the monetary stimulus was seen as insufficient by the markets, a sentiment reflected in the price of key commodities, including crude oil, copper, and iron ore.
Crude oil futures rose on Wednesday as the U.S. dollar declined. Brent Crude prices settled at $77.12, the highest finish in almost a month.
“WTI crude prices are finally stabilizing above the $70 level as energy traders anticipate the start of summer should keep demand steady over the next few months. Oil got a boost from a weaker dollar and optimism that the economy will remain strong throughout the summer,” Ed Moya, senior market analyst at OANDA, wrote late on Wednesday.
“Oil was getting near the bottom of its recent trading range and it could continue rebounding if the headlines for China remain upbeat.”
In early Asia trade on Thursday, Brent was falling again to below $77, as was the U.S. benchmark WTI Crude, which traded at just above $72 per barrel.
“The somewhat surprising return of an upward momentum in the previous trading session appeared to have been exhausted, opening the door to some profit-taking selling,” Vanda Insights said in a Thursday note.
Copper prices rose following the Chinese monetary easing and amid signs of a tighter copper market in China. The Shanghai copper futures settled at a two-month high of 68,930 yuan ($9,582) per metric ton, Reuters columnist Clyde Russell noted.
Iron ore prices, however, declined as traders and analysts believe that the Chinese stimulus so far will not be enough to boost the property sector in China.
By Tsvetana Paraskova for Oilprice.com