U.S. crude oil prices were steady in early Asian trading on Tuesday after lower domestic production as well as dipping output from OPEC tightened the market just as China further eased its monetary policy in a bid to boost consumption.
U.S. West Texas Intermediate (WTI) crude futures were trading at $33.79 per barrel at 0018 GMT, 4 cents above their last settlement. That was up 30 percent from Feb. 11, when the contract hit a 2016 low of just over $26 a barrel, a level last seen in 2003.
Analysts said that prices were being pushed by hopes that aggressive Chinese monetary policy easing would boost demand while at the same time oil output was dipping in the United States and also the Organization of the Petroleum Exporting Countries (OPEC).
China, the world’s largest energy consumer, cut its reserve requirement ratio, the amount of cash banks must hold as reserves, for a fifth time in a year, injecting an estimated $100 billion worth of long-term cash into the economy to cushion the pain from job layoffs and bankruptcies in industries plagued by overcapacity.
“The Chinese latest rate cut may provide a short term boost to sentiment towards some commodities,” ANZ bank said on Tuesday.
“Crude oil prices continue to rise. WTI prices closed at what we see as a key level of $34 per barrel – a breakout above this will add to the view for some that the bottom in the crude oil market is now in place,” it added.
The rising prices were a result of a dip in supplies.
U.S. government data showed crude oil output last December fell for a third straight month by 43,000 barrels per day (bpd) to 9.26 million bpd, its lowest in a year.
Supply from OPEC has also declined, falling by 280,000 bpd between January and February to 32.37 million bpd, according to a Reuters survey based on shipping data and information from sources at oil companies, OPEC as well as from consultants.