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WTI has risen above $81.00 in anticipation of a large fiscal stimulus package from China
So far on Monday, the US crude oil benchmark, Western Texas Intermediate (WTI), is trading at $81.02. WTI prices rise somewhat for the third day in a row. However, WTI prices have reached the conclusion of their longest weekly increase since 2023, as the Federal Reserve (Fed) may tighten monetary policy further and China's economic difficulties continue. In terms of data, Baker Hughes said on Friday that the total number of active rigs in the United States fell by 12 last week.
Fears over China's financial crisis and real-estate troubles increase risk aversion, dragging WTI prices lower. Evergrande, China's second-largest real estate developer, filed for Chapter 15 bankruptcy in a US court last week. Furthermore, the Chinese House Price Index for July fell to -0.1% from 0% the previous month. This report raises the prospect of a Chinese property disaster. Market investors will pay attention to the headlines surrounding China's economic troubles, and more proof of the country's economic downturn may weigh on the black gold.
Furthermore, the FOMC minutes noted that inflation remained unacceptably high, and officials are concerned about inflationary pressures. Fed policymakers also stated that additional rate hikes may be required to achieve the target inflation rate, and that future rate decisions will be based on incoming data. It is worth mentioning that higher interest rates increase borrowing costs, which can slow the economy and reduce demand for oil.
On the other hand, the prospect of fresh Chinese stimulus may limit the fall for WTI prices. According to Reuters, the People's Bank of China (PBOC) said on Sunday that China would organize financial assistance to alleviate local government debt concerns.
Moving forward, oil traders will keep a close eye on the development of China's large fiscal, and risk sen mood will continue to be the primary driver of WTI prices. The Global Purchasing Managers' Indexes (PMI) statistics and Federal Reserve (Fed) Chairman Jerome Powell Speaks at the Jackson Hole Symposium will be in the focus later this week. These developments could have a considerable impact on the USD-denominated WTI pricing. Oil traders will use the data to identify trading opportunities around the WTI price.
Risk Warning: Trading financial instruments involves significant risk and may result in the loss of your invested capital. Please ensure you fully understand the risks and seek independent professional advice if necessary. This article does not constitute investment advice or a trading recommendation. Past performance is not indicative of future results.
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