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Oil Prices Rebound as China Signals More Openness

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Crude-oil prices rebounded in early Asia trade Thursday, tracking the rally in most Asian stock markets after Chinese President Xi Jinping signaled more openness to foreign investments during his visit to the U.S.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $44.83 a barrel, up $0.35 in the Globex electronic session. November Brent crude on London’s ICE Futures exchange rose $0.31 to $48.06 a barrel. Nymex futures are down 9.6% month-to-date while Brent is 11.8% lower in the same period.

Asian shares mostly swung higher. Australia’s S&P ASX 200 was up 1%, after hitting a two-year low on Wednesday. The Shanghai Composite Index gained 0.8% and South Korea’s Kospi was up 0.5%, while the Nikkei Stock Average was 2.1% lower as trading resumed after a three-day holiday.

Despite the rise in Asia trade, oil prices settled sharply lower on Wall Street overnight after investors were unimpressed by the decline in U.S. crude-oil stockpiles last week.

Official data released by the Department of Energy late Wednesday indicated U.S. inventories dropped 1.9 million barrels last week, compared with the 100,000-barrel draw estimated by analysts. However, the drop was smaller than the 3.7-million drop reported by the American Petroleum Institute and the 4.3-million barrel decline in the same week of 2014, Citi Futures said in a note.

Speaking at a dinner in Seattle on Tuesday, Xi pledged to push ahead with economic reforms without resorting to competitive currency devaluation. He also emphasized China’s willingness to usher in more foreign investments.

The remarks came amid growing concerns that the world’s second-biggest economy and crude importer is losing steam. On Wednesday, the preliminary China Caixin manufacturing purchase managers’ index felled to a six-and-half-year low of 47.0 in September.

Market Watch

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.
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